Angry reactions trail NERC’s plan to hike tariff review

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Electricity consumers have faulted plan by the Nigerian Electricity Regulatory Commission (NERC) announces to implement another tariff review for the country’s 11 power distribution companies in July.

NERC had stated in its notice of ‘Minor and Extraordinary Review of Tariffs for Electricity Transmission and Distribution Companies dated April 26, 2021 that the review was as a result of changes in inflation, foreign exchange, gas prices, available generation capacity and capital expenditure.

“Accordingly, this notice is issued to inform the general public and industry stakeholders of the Commission’s intention to conclude the Extraordinary Tariff Review process for the eleven DisCos, commence the processes for the July 2021 Minor Review of Multi-Year Tariff Order (MYTO) – 2020 to consider changes in inflation, foreign exchange, gas prices, available generation capacity, and CAPEX required to evacuate and distribute the said available generation capacity in accordance with Electric Power Sector Reform (ESPRA) and other extant industry rules.

“This notice is hereby issued in compliance with the provisions of EPSRA, the business rules of the commission, and the regulations on procedures for electricity tariff reviews in the Nigerian electricity supply industry to solicit comments from the general public on the proposed reviews.

“Stakeholders and the general public are invited to send their comments to the Commission within 21 days from the date of this publication,” NERC said.

It further stated that extraordinary tariff reviews where done in instances where industry parameters had changed from those used in the operating tariffs to such extent that a review was urgently required to maintain the viability of the industry.

“Further to the above, the commission held series of public hearings and stakeholder consultations in the first quarter of 2020 on the Extraordinary Tariff Review Applications of the 11 electricity distribution companies to consider their respective five-year Performance Improvement Plans,” it added.

Reacting to the proposed tariff hike, the president, Nigeria Consumer Protection Network, Mr. Kunle Olubiyo said in a letter addressed to NERC described as “ill-advised and unacceptable” the timing of another increase in electricity tariff in the country the country.

“We had expected that the regulator would have allowed the impact of January 2021. The 1st September 2020 major review which was giving a backing in January which has literally translated into 120% – 200% increase in some places is yet to settle down.

“In several homes, offices, business outlets, hotels, Nigerians have stopped using air conditioners, micro waves, water heater, and basic household equipment that is taken for granted in another clime.

“This is most embarrassing and calculated attempts to give the present government a bad name. The question is of what value is the last increase in the electricity tariff to Nigerians, end users of electricity and the Nigerian economy.

“The much-celebrated tariff reflected tariff in most cases has instigated poor quality of poor supply and a glaringly undisputable celebrated decrease inefficient service delivery as against Service reflective tariff embedded with a desired increased in services and increase in load generation, improvement in load dispatch, load wheeling, load utilization.

“There are lots proven Cost Inefficiencies, Production Inefficiencies, over bloated cost of gas, padded cost of market shortfalls, and all manners of padded cost and tariff / price indexes that government needs to clean up.

“Government for the first time should listen to us for crying out loud. This unilateral approach is perdition and distortions. Nigerians in Dubai and Nigerians doing business with United Arab Emirate, UAE cannot access nor use dollar to dollar transaction.

“A lot of business designated for Nigeria is now being shifted to Ghana. Nigeria has signed the African Free Continental Trade Agreement.

“Nigeria needs to get it right with her Fiscal Policy, Electricity and all other basic parameters needed/required to upscale Nigeria’s Ease of doing business.”

In his perspective, the founder of Global Analytics Consulting Limited, Mr. Tope Fasua, said Nigerians are paying for corruption in the electricity market in the name of ‘cost-reflective tariff’.

He said the country will probably never get out of the vicious cycle.

“I did small research some time back and realized that already we now pay more than abroad (USA/UK etc).

“However, the electricity market in Nigeria is largely dismal. If a company paid huge bribes to get their DISCO license, they load that somehow into the tariff and they are in connivance with state agencies benefiting from the illegal payouts. The Nigerian people are in the middle.

“Many have to buy generators, install inverters, solar panels, and other unnecessary expenses. Eventually, most of them will become uncompetitive vis-a-vis their counterparts elsewhere in the world,” he said.

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