The upward increase of VAT from 5 percent to 7.5% by government effective from 1st February 2020 is already having rippling effects on prices of meters and electricity supply services in the power sector. In this piece, Daily Trust explored the changes effected by some power firms and the additional costs the electricity consumers are being made to pay. This is also ahead of the expected increase in electricity tariff nationwide which is being speculated for April or June this year.
The Nigerian Electricity Regulatory Commission (NERC) in May 2019 pegged the amount that should be paid for the purchase of meters by customers of the 11 electricity distribution companies (DisCos) under the Meter Assets Providers (MAP) scheme.
The rates then were exclusive of VAT and so, many DisCos added extra 5 percent for VAT. However with the upward VAT review, the DisCos since last week began issuing notices to their customers about the implementation of the new rate which started on Saturday.
Latest findings on the reviewed rates by most of the DisCos indicate that the costs of meters have gone up by an average N1,300.
The Port Harcourt Electricity Distribution Plc (PHED) in a statement notified its customers of the hike.
Port Harcourt DisCo sells a single phase meter for N36,991 under the Meter Assets Provider (MAP), it has added the increased VAT of 7.5 percent which is N2,774. Customers will now pay additional N924, making it N39,765 for the single phase.
Those who want to buy the three phase meter with N67,056 cost price had been paying N70,408 inclusive of the 5 percent VAT. From Saturday, they are now made to pay N72,085, signifying additional cost of N1,677.
The Abuja Electricity Distribution Company (AEDC) in a notice also announced the additional cost of N924 for its single phase meter and N1,677 for the three phase meter. The same additional costs have been reflected by Ikeja Electric in a notice to its customers. Eko DisCo further confirmed similar rates in a notice to its customers.
The management of Ibadan Electricity Distribution Company (IBEDC) said the increase was necessitated by the federal government’s increase in VAT from 5 percent to 7.5 percent. “In the light of the above, a single-phase Meter which used to cost N38,325 (VAT inclusive) will now cost N39,237.50 (VAT inclusive).” This is a higher of N1002 that its over one million customers may have to bear. For its three-phase Meter which used to be N70,350, Ibadan DisCo now sell it for N72,025, indicating a rise by N1900.
“Subsequently, the meter service charge on MAP payment by instalments will also be reviewed to accommodate the new VAT charge,” IBEDC added. Jos DisCo is selling a single phase credit meter for N31,090 and is adding a 7.5% VAT of N2,331; its single phase prepaid meter sells for N36,992 and customers must pay N2,774 as the new VAT rate; the three phase prepaid meter goes for the N67,055 approved rate but customers will also have to pay N5,029 as the new VAT rate.
Yola DisCo which is managed by the Bureau of Public Enterprises (BPE) had been selling its single phase meters for N36,404 under the 5 percent VAT rate, while it sells the three phase meters for N66,594.
However, with the implementation of the 7.5 percent VAT rate, the MAP vendor for the DisCo which is Chris Ejik International Agencies Limited will have to add the rate and raise the cost for a single phase meter to N37,177. The DisCo will sell the three phase meter at N68,009 to its customers across Adamawa, Taraba, Borno and Yobe States.
Electricity bills rise for 8m customers
The bills for electricity consumption have also increased for the about eight million registered customers captured by the 11 DisCos based on the records of NERC.
Officials of the various power firms however clarified that the increment has nothing to do with the tariff review but the upward review of the VAT by the federal government. Abuja DisCo in an update said the new VAT is reflected on its vending platforms.
A notice by AEDC stated: “Customers are to note that VAT is only applied on the aggregate cost of energy consumed by the customer per time and the cost of the meter and not an increase in the unit cost of electricity or meter.”
For Ibadan DisCo, the management pointed out that, the VAT on tariff has been adjusted to accommodate the new 7.5 percent rate. “The company appeals to its esteemed customers to take note, as this will be reflected during bill payment and vending for postpaid and prepaid customers respectively.”
Also in a notice, the Jos DisCo said the increment will reflect on monthly bills for customers who are under the estimated billing system and for vended tokens for the metered customers.
Consumers cry foul over increase
While the DisCos have absolved themselves of any blame over the increase in prices for electricity supply services, consumers of electricity have cried foul, saying the VAT increase could stifle their purchasing power.
They said this is especially so at a period when the same l government was planning an upward tariff review that could over 50 percent in the short run. An Abuja resident, Mr Falode Bello, said he discovered the increase when he vended for token for his meter on Monday. “I just saw that the units I used to get for N5,000 have decreased and the print out indicated that the VAT is now 7.5%.
Most customers of AEDC are not happy with this development because we hear that on top of this, they will soon increase electricity tariff”, Bello said.
In her comments, Margaret Onuh, a commercial customer of Abuja DisCo in Nasarawa State, said she was already groaning under the estimated billing. “With this one now, the blow will be huge on us. W
e are yet to get the bill for January, but I expect it to be higher with this VAT increase,” she noted.
Source: Daily Trust