The new electricity tariff

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The insistence of the Nigerian Electricity Regulatory Commission (NERC), to increase electricity tariff despite the current erratic power supply and frequent system collapses across the country smacks of gross insensitivity to the plight  of consumers. Worse  still, the argument by the chairman of the electricity regulatory body, Dr. Sam Amadi,  that “tariff must increase in spite of shortfall in service delivery”, and that the increase “is in the interest of Nigerians”, is offensive and contradictory.

NERC recently announced a range of fixed tariff charges, ranging from N500, N700 and N800 for three categories of consumers. The new tariff, according to NERC, is compulsory and takes immediate effect, regardless of the decline in power supply. The over 100 per cent increase is also in spite of the poor performance of   Independent Power Producers (IPPs) that were licensed two years ago by the Federal Government to generate electricity supply to the national grid.

According to the new tariff plan which the NERC boss has strongly defended, consumers are required to pay higher tariff on two fronts, namely, fixed cost and energy cost, also known as cost per kilowatt hour. This amounts to double jeopardy for electricity consumers, whether private or corporate, who have been groaning under the government’s less than satisfactory performance in the power sector.

We are not unmindful of the fact that the Multi-Year Tariff Order (MYTO), which took effect from June 2012, provides for periodic increment in electricity tariff per kilowatt, a plan which is in consonance with Section 76 of the Electricity Power Reform Act, 2005.

However, such automatic adjustment in tariff every year would have made economic sense if government had significantly stabilised power supply before shifting more of the costs of electricity generation to the consumers. With power generation and distribution still falling short of the projected megawatts per year, any hike in tariff is putting the cart before the horse. It is unacceptable.  The truth is that consumers in the country would not mind a reasonable hike in tariff if they are assured of stable power supply. But, to force such huge increase down the throats of consumers is to enforce regulations  without any tangible or  commensurate improvement in  service delivery.

 

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2 Comments

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  2. As I speak to u today the service charge is more than the cost of energy I consumed as supplied by PHCN. Tell me where the incentive lies for IPP or PHCN to generate more kilowatts as they can smile to the banks without doing without generating zero kilowatts of electricity. Nigeria I hail thee…

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