Electricity Tariff Hike: Consumers Should Not Be Made To Pay For Inefficiency Or Corruption Costs – LCCI


Nigerians have reacted to last week’s announcement by the Nigerian Electricity Regulatory Commission (NERC) that a new tariff regime would become effective from November 1.

An advocacy group, Nigerian Electricity Consumers Advocacy (NECAN), in its reaction, said the recent “consultations” on tariff carried out by electricity distribution companies (DISCOS) were a mere trick to justify tariff hike.

“We believe NERC is allowing the public to be over billed by allowing the DISCOs justify the increases. Otherwise, how can it be explained NERC allowed a tariff hike of 12.5 to 48 percent in January, and allowing same percent in October of that same year?” NECAN President, Mr. Tomi Akingbogun, said.

“NERC has allowed the DISCOs to take advantage of everyone and had changed the rules at will thereby breaking all the rules. The condition given to them was to ensure that customers are metered before complaining of losses,” Akingbogun said.

He, therefore, called on the President Buhari to keep his promises to Nigerians and discourage the exploitation by the DISCos.

Also commenting, the Director General, Lagos Chambers of Commerce and Industry (LCCI), Mr. Muda Yusuf, said the proposed upward review in electricity tariff at this time is worrisome, as consumers should not be made to pay for inefficiency or corruption costs.

“It is important to evaluate the elements of the current costs especially the integrity of procurement processes and other operational expenditure under the current dispensation. The risk of bloated costs is typically high with such enterprises, especially as they operate in a monopolistic environment.

“Pricing is only one component (although fundamental) in the power reform process. There are other issues such as the gas availability, security of gas infrastructure, adequacy of investment in gas infrastructure, security and adequacy of the transmission lines, and the general framework to mitigate the risk of investment in the sector.

“The problem of outrageous billing is yet to be addressed. The commitment to the provision of meters for electricity consumers to ensure fair billing is inadequate. A vast majority of consumers still have no meters.

“Yet this is fundamental to a good relationship between the power firms and their customers. Many consumers feel exploited at this time because of the inadequacies in billing. The contentious fixed charge is still in place. It is heart rending that the choice of locations of many of the Independent Power Projects, IPPs, was informed more by politics than the economics of power generation.

“Access to a major input in power generation, which is gas, was not sufficiently taken into account. This reality has badly affected the cost profile of the IPP projects. All these are complications and challenges on the path of the power sector productivity,” he maintained.


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