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No basis to hike electricity tariff

Published by on June 28th, 2017.


In a country where electricity supply has permanently been abysmally poor and most consumers provide their own power supply, it is puzzling to hear of constant tariff increments by electricity companies.
Last January, the Federal Government announced through the Minister of Power, Works and Housing, Mr. Babatunde Fashola, that there would be no further hike in electricity tariff in the nearest future. The assurance was given in response to media reports then that government was contemplating an upward review of the existing tariff regime.
But it seems the story is about to change. Power sector key players are hotly pushing for another increase. Their argument is further reinforced by the disagreement between Electricity Generation Companies, GENCOs and Electricity Distribution Companies, DISCOs over a planned centralisation of accounts of the latter.
The Federal Government had earlier in the year, threatened to centralise the accounts of the DISCOs over their inability to fulfil their monthly remittances with the Nigerian Bulk Electricity Trading Plc, NBET, accusing them of remitting only 30 per cent of their monthly energy invoices last year. But the DISCOs had countered that the tariffs paid by customers were not cost-reflective for them to recover the actual cost of power distribution.
The same consideration is said to have influenced an earlier plan to hike electricity tariff which was aborted following stiff public opposition. It would be recalled that the Nigeria Electricity Regulatory Commission, NERC, had in January 2016 announced a 45 per cent increment in electricity tariff. Fashola had at the time defended the new tariff, saying it was necessary for the market to survive. He said that going back on it would cost government over N575 billion.
But the Minister was eventually overruled. The Senate directed that the new tariff be reversed to enable it conclude a public hearing on it. A Federal High Court in Lagos also declared it illegal, while restraining the NERC from further increasing electricity tariff except in strict compliance with the provisions of the Electricity Power Sector Reform Act 2005.
It is not clear if the provisions of the Act are taken into consideration in the current contemplation to hike electricity tariff. What however is clear is that, given the worsening services being provided by the GENCOs and the DISCOs, any hike in tariff at this time cannot be justified. As a result the Federal Government should compel these companies to stop further exploitation of consumers through tariff hikes and instead work towards improving electricity services in the country.
Electricity consumers are forced to suffer the double jeopardy of poor services and high tariffs. That is unacceptable. It is the duty of government to make the lives of the people better and not allow them to suffer at the hands of authorised service providers.

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