Nigerians kick as FG approve 50% electricity tariff increase

50% electricity tariff increase

Nigerians kick as FG approve 50% electricity tariff increase


 

Condemnation, anger and frustration are the words that capture expressions of many Nigerians, particularly in the social media space, following the new hike in electricity tariff announced by the Nigerian government.

The news broke on Tuesday that the Nigerian government had yet again approved an increase in electricity tariff payable by electricity consumers in Nigeria.

The Nigerian Electricity Regulatory Commission (NERC) approved over 50 per cent hike in electricity tariff payable by customers of the 11 Distribution Companies (DisCos).

Daily Trust reported that a Multi Year Tariff Order (MYTO) signed by the new Chairman of NERC, Sanusi Garba, on December 30, 2020, showed that the new tariff increase took effect on January 1, 2021.

The new increment is coming barely two months after the implementation of the controversial hike proposed last year, and the latest invalidates the previous Order NERC/2028/2020, understands.

In the new order, NERC said it considered the “…14.9% inflation rate rise in November 2020, foreign exchange of N379.4/$1 as of December 29, 2020, available generation capacity, US inflation rate of 1.22% and the Capital Expenditure (CAPEX) of the power firms to raise the tariff…”

Unlike the erstwhile order implemented in 2020, which exempted low power consumers, the revised Service Based Tariff (SBT) also saw increase in the rates payable by all classes of electricity users.

The order is effective till June 2021 while a Cost Reflective Tariff (CRT) expected to raise the new cost higher will be activated from June to December 2021.

Although, the NERC and other sources within the presidency have come out with contrary explanations but which were again dismissed by Nigerians as knocks continued to trail the development.

NERC debunks 50% hike

Via its official Twitter handle, NERC debunked the fact of 50 per cent increase as it said: “The Commission hereby state unequivocally that NO approval has been granted for a 50 per cent tariff increase in the Tariff Order for electricity distribution companies which took effect on January 1, 2021.

“On the contrary, the tariff for customers on service bands D & E (customers being served less than an average of 12hrs of supply per day over a period of one month) remains frozen and subsidised in line with the policy direction of the FG.

“In compliance with the provisions of the EPSR Act and the nation’s tariff methodology for biannual minor review, the rates for service bands A, B, C, D and E have been adjusted by NGN2.00 to NGN4.00 per kWhr to reflect the partial impact of inflation & movement in forex.

In the light of strong public interest on this matter, the media is hereby requested to retract their earlier publications misinforming electricity consumers nationwide about a purported 50 per cent increase in electricity tariffs.

Moreover, contrary to the claims of the NERC that the latest hike is minimal at about 10 per cent on ranging between N2 and N4, a letter it sent to one of the electricity distribution companies indicated that a segment of consumers have been slammed with over 121.5 per cent increase.

Using the case of Ibadan DisCo, NERC’s letter shows that Band A (minimum supply of 20hrs daily) will increase by N6.85 to N69.18/kwh, indicating a 10.98 per cent rise.

Also, the tariff for customers in Band B (minimum supply of 16hrs daily) will increase by 13.1 pe rcent (N7.65) to N66.04/kwh from the present N58.9/kwh.

For customers in Band C (minimum supply of 12hrs daily), the increase is 29.13 per cent (N14.19) to N62.92/kwh).

The highest tariff increase will be for consumers in Band D (minimum supply of 8hrs daily) with 121.5 per cent (N32.79) hike to N55.76/kwh from N26.97/kwh.

Stakeholders react

Expressions of Nigerians to the new tariff increase smack of frustration as many described have described such move as insensitive to the plights of Nigerians, whose means of livelihood has adversely affected by recession and Coronavirus impacts.

Some have also reacted that the increase in the electricity tariff has watered down the recent gain of data price reduction announced my Isa Pantami, the minister of communications and national economy and such, returning Nigerians to square one.

Stakeholders across the country have kicked against the tariff hike with the President of the Electricity Consumers Association of Nigeria, ECAN, Chijoke James, describing it as insensitive, noting that so far, and the improvement in services promised by the government during the tariff increase last year has not happened.

He said, “There are no disposable incomes for people to spend combined with galloping inflation. I think it will be insensitive on the part of government to allow for that kind of increase in this period.”

Also, the President of Network for Energy Reform (Nigeria), Mr Kunle Olubiyo, said there was a big mis-alignment of governance in the power sector and the policy direction of government.

He said, “What we are saying is that the tariff before September 1, 2020,  that was N24/kwh was profitable for the companies.”

Olubiyo accused the government of hiding behind the price of gas to increase tariff, noting that as a gas producing country, the cost was far below what the government was disclosing.