Consumers kick as NERC finalises new electricity tariffs

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Consumers kick as NERC finalises new electricity tariffs

Consumers kick as NERC finalises new electricity tariffs
November 23
07:14 2015

As the Nigerian Electricity Regulatory Commission finalises the review of tariffs as requested by the power distribution companies, consumers have rejected any increase in their bills.

Power consumers have outlined reasons why the Nigerian Electricity Regulatory Commission should not approve any hike in electricity tariffs. But the regulator has finalised its position on the requests by the electricity distribution companies for increase in the different types of tariff classes.

Early last month, The PUNCH had exclusively reported that the firms were seeking an increase in tariff by an average of 49.4 per cent as they intensified their demand for a cost-reflective tariff structure.

NERC had stated that it would review their requests thoroughly before approving any of them adding that the new rates would be made public by the end of October.

But the commission’s Chairman, Dr. Sam Amadi, told our correspondent in Abuja last week that NERC had yet to announce the new rates because it was still reviewing the requests by the Discos, and was quick to state that the review was in its final stage.

Although Amadi did not state if the outcome of the review would lead to increased electricity tariffs, sources at the commission as well as the consumer advocacy group inaugurated by NERC stated that there was intense pressure on the regulator to raise the electricity tariffs.

“We have it on good authority that NERC is under intense pressure to increase electricity tariffs as it finalises the review of the requests presented by the Discos, but this will not work because the Discos have no basis to demand for any increase whatsoever,” the Assistant National Secretary, Nigerian Electricity Consumer Advocacy Network, Mr. Obong Eko, said.

He argued that the electricity distribution firms were not following the parameters set for them by NERC and this was why they always complained of not making enough revenue.

According to Eko, one of the parameters is that the Discos should meter all their customers. He stressed that only about 30 per cent of electricity consumers nationwide were currently being metered.

He said, “They were also told to employ enough hands to help them collect bills from a sizable percentage of their customers. But after our analyses and investigations across the country, we noticed that on the average, most Discos only collect bills from one out of every five of their customers.

“Now, tell me, is that how a business should be run? And if a business is run in such a manner, will it break even talk less of making a profit soon enough?

“Of course, the answers to my questions are no. This shows that most of the Discos are still not prepared to take charge; what they do is to over-bill the few faithful customers and continue complaining that they don’t make profits. They should as a matter of urgency carry out adequate customer enumeration. We are tired of hearing that they don’t have money. If you had no money, why did you apply for the acquisition of a power firm?

“What they are doing now is to bill consumers excessively in order to generate revenue to acquire meters. This, of course, is opposed to the normal principle of investment. You put in money in the business by metering customers, because the meters will ensure that you get what is due you and it ensures profitability and not the other way round. They must know that no matter the pressure on NERC, consumers are opposed to any form of tariff increase until meters are provided.”

Eko stated that an increase in tariff would be highly detrimental to the overall Nigerian economy.

He argued that many small businesses would go bankrupt if NERC should increase the power tariffs, adding that this would push up the unemployment rate in the country.

Eko added, “Currently, many Nigerian companies find it tough to effectively compete with their counterparts internationally, not to talk of when bills are hiked. Please this should not happen.

“A lot of companies come to us, telling us to interface with NERC and make them see reasons why Nigeria is not ripe for an increase in electricity bill. In fact, many of these companies spend about 30 per cent of their revenue to pay for the electricity being supplied currently. So, if the bill is increased, how much of their revenue will they now pay for electricity alone? The Federal Government must not allow this.”

When contacted, the Executive Director, Association of National Electricity Distributors, Mr. Sunday Oduntan, told our correspondent that the current electricity tariffs were not cost-reflective.

This, he said, had impacted negatively on the operations of the Discos across the country and had continued to drag down their revenues.

“All we want are cost-reflective tariffs. Our people should realise that we need cost-reflective tariffs or else this industry will die. It is not primarily about tariff increase, but all we are saying is that the tariffs should be cost-reflective or else this industry will collapse,” Oduntan said.

The Managing Director/Chief Executive Officer, Abuja Electricity Distribution Company, Mr. Neil Croucher, stated that the Discos were committed to metering their various customers in order to ensure profitability.

He said, “This issue comes up a number of times and I can confidently speak on behalf of the Abuja Disco. But I believe that the Discos are totally committed to installing meters. In some reports, you hear that the Discos don’t want to meter because they want to fleece customers with crazy bills. But that is absolutely not the case, particularly in our case.

“We see it as a business imperative that we have to get meters to all our customers. In addition, we believe it is the right of every customer to be accurately metered for the power that they consume. To expand on this, first is that the majority of our complaints are around estimated bills. We also know that the willingness of customers to pay is directly related to whether they have meters or not.”

Croucher stated that many Discos had discovered that the areas where they were recording high losses were locations with low levels of metering.

He observed that there was a direct correlation between the losses being experienced by the Discos and whether their customers had meters or not, adding that it was a clear business imperative to get meters to the customers.

The AEDC boss said, “It is also true that the rollout of meters has not really taken off to any great extent yet. And I think our situation is similar to other Discos.

“We could not just roll out hundreds of thousands of meters without the platform or foundation being in place. And the foundation is the billing, vending and management systems around such an aggressive metering rollout.”

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