Between New Tariff And PHCN’s Services
Last Friday, the much expected new electricity billing regime took effect. The new tariff, which is introduced by the Nigerian Electricity Regulation Commission, NERC, abolishes the payment of meter fees and connection charges. It however, increased monthly fixed charges to be paid by customers with high voltage maximum demand (otherwise referred to as residential 4 (R4), irrespective of whether there is electricity supply for the month or not.
The charges vary across the 11 distribution companies of the Power Holding Company of Nigeria, PHCN. For instance, while R4 customers under Kaduna Distribution Company will pay N156, 356 their counterparts under Eko and Ikeja will pay monthly fixed charges of N118, 830.56 and N109, 449.20 respectively. Customers in Jos, Kano and Port Harcourt will however, pay uniform fixed charge of N117, 267 monthly while Yola, Adamawa State customers will pay N100, 849.62. R4 customers in Abuja and Benin will pay N113, 358.10 and 101,631.40 respectively, while those in Enugu and Ibadan will pay N117, 416.46 and N117, 267 respectively. The lowest paying customers otherwise known as R1 will pay no fixed charges.
A single phase prepaid meter costs N25, 000 while a three-phase prepaid meter costs N55, 000.
Dr. Haliru Dikko, head of tariff and rates regulation of the NERC, said the rationale behind the price increase is for cost effectiveness and service delivery. Dikko said no utility provider would enter the market with the current price regime. He attributed the increase to increase in natural gas supply and transport fare.
Although high voltage customers will be made to pay higher charges, Dr. Dikko however, said the manufacturing sector will pay less than what they used to pay. According to him, with the introduction of the new tariff, manufacturing companies which used to pay as high as N3 million will now pay N100, 000, this is because whatever the manufacturing sector produces will have adverse effect on the consumers.
To successfully implement the programme, the commission has distributed meters free of charge to customers. The distribution process will last between 12 and 16 months.
The new tariff, which was approved by the National Economic Council, NEC, which has Vice President Namadi Sambo as its chairman and comprise the 36 state governors, governor of the Central Bank of Nigeria as well as ministers of finance, national planning and Attorney General of the Federation and minister of justice has continued to generate reactions from Nigerians. President general of the Trade Union Congress of Nigeria, TUC, Comrade Peter Esele once said the federal government should ensure the availability of the product before considering any hike in electricity tariff. He attributed corruption and mismanagement of resources as the bane of the power sector. “There is no justification for another increase in tariff because Nigerians are not getting value for the huge amount being paid for electricity as the power situation has worsened in recent times.”
An Abuja resident, Abdullahi Audu described the introduction as untimely, especially as Nigerians are still battling with the debilitating effects of the fuel subsidy removal on the economy. Another resident, Olusola Adegbite said it is ridiculous that the nation still experiences epileptic power supply more than 100 years after it began electricity generation from Ijora power station. An energy expert, Amadi Chukwu said the new policy will worsen the economic misery of the Nigerian masses, who he said constitute about 70 percent of the population.
Before the latest increase, Nigeria last year increased its electricity tariff from N4.20K to N7.00. Nigerians are worried that electricity supply has been epileptic despite the increases. The national generating capacity is said to still be less than 4,000 megawatts, MW. A member of the House of Representatives, Yakub Balogun observed that the increase in electricity tariff is tantamount to forcing Nigerians to pay more for a service they do not enjoy. “Power generation and distribution has been very erratic and efforts to put it right have failed in the past despite the declaration of a state of emergency in the sector; regular power supply remains a mirage to Nigerians,” Balogun told his colleagues while contributing to the motion on the new tariff.
As part of effort to improve energy supply in the country, the name of the agency managing energy generation and supply was changed from Nigeria Electric Power Authority, NEPA, to Power Holding Company of Nigeria, PHCN. In 2002, PHCN was unbundled into four– generation, transmission, distribution and marketing for effective service delivery. In addition, 18 successor companies comprising six generation companies, one transmission company and 11 distribution companies were established. The federal government equally embarked on the construction of national integrated power projects, NIPP, and invested huge sums of money in the projects. An energy expert, Chukwu, noted that about 50 private independent power companies have been licensed to produce about 20,000 megawatts of power in the nearest future. In spite of all these measures, power supply in the country has remained epileptic.
But Dr. Dikko said the absence of investment is the major reason for the failure of the power sector in the past three decades. He said the increase in tariff would provide incentives for improving performance, reduce cost and improve quality of service. The advantage of the new tariff, he argued include foreign investment and employment generation in addition to efficient service delivery. He noted that the federal and state governments are considering selling their independent power plants but said this could not be possible if the tariff is not attractive for investors to come in.
Esele however called on the government to revive most of the electricity projects under the independent power projects, IPP and invest in facilities to bring in constant supply of gas to the plants and ensure that their operations are not hampered by paucity of fuel to run the turbines. He believes that this will have multiplier effect as it will bring back the investors that have fled the country and attract new ones. “It is imperative that we explore every means possible to solve our electricity problem if we are serious about all the high sounding rhetoric on Vision 2020 and its promises for work,” he added.
Governor Liyel Imoke of Cross River State who spoke on behalf of NEC said the joy in the new tariff is that there would be marginal or no increase in tariff for the poor who consume less power, a situation Dr. Dikko described as balance of payment, whereby the rich will pay for the poor. The governor disclosed that N50 billion had already been included in the 2012 budget to subsidise power for those who cannot afford to pay for the next two years.
The new tariff is about 88 percent from the N7.00 increase last year.