Power firms demand 200% increase in tariff

Power firms demand 200% increase in tariff

There may be a fresh increase of over 200 per cent in electricity tariff being paid by residential consumers if a proposal by power distribution companies to raise the average energy charge to N105 per kilowatt-hour from the current rate of 22.8KWH is approved.

This is coming less than eight months after about 45 per cent increase in tariff was imposed on electricity consumers
nationwide.

The power firms attributed their latest push for tariff increase to high inflation rate in the country, scarcity of foreign exchange, devaluation of the naira and the huge debts being owed them.

Already, the Discos said they had hinted the Nigerian Electricity Regulatory Commission about the proposal but no action had been taken on it yet.

The Chief Executive Officer, Association of Nigerian Electricity Distributors, an umbrella body for the Discos, Mr. Azu Obiaya, confirmed the latest agitation for tariff increase, in an interview with our correspondent, stressing that it was important to raise the tariff in order to remain in business and serve the people
well.

Azu said, “To review the tariff, we will be looking at an average rate of N70 per kilowatt-hour for residential consumers. But some Discos will like to have the rate as high as N105/kWh.”

Each Disco has a fixed energy charge payable by its customers.
The highest charge, according to documents obtained by our
correspondent from NERC for the year 2016, is N32.26/KWH and
this is payable by R2 consumers under the Jos Electricity
Distribution Company.

The lowest energy charge of N15.83/KWH is payable by R2
customers who get power from Ikeja Electricity Distribution
Company.
A further analysis shows that the average energy charge for all
the 11 Discos is N22.8/KWH.

But the Discos were said not to be comfortable with the current
rate, as they argued that it was not cost reflective and was
hampering the required expansion of infrastructure as well as the
smooth flow of operations.

Azu, who spoke to our correspondent on the sidelines of a power
dialogue in Abuja on Thursday, said the debts owed power
distribution companies by private homes, businesses and
government ministries, departments and agencies post-
privatisation amounted to N568bn.
He also stated that one reason many Discos had not metered
their customers was due to the huge debts owed them, as well
as the tariff issue.

This, he said, had hampered the operations of the different
Discos, a development that had made it difficult for the
companies to meet the funds remittances required of them by
the Market Operator.
Obiaya said, “Discos are experiencing revenue shortfall on a
monthly basis of N38bn. As of June 2016, the MDAs owed the
Discos N53bn post-privatisation.
“The books of the Discos are so bad that they have no chance
anymore to access finance. These books do not reflect the cash
flow that is necessary for them to be taken seriously by any
lender.”
A senior official at NERC told our correspondent that although the
Discos had been calling for an upward review in tariff, the
regulator had not considered their demand.
“The minor review of tariff is ongoing at present but NERC has
yet to consider their plea for such increase in tariff, although the
economic fundamentals in Nigeria have seriously changed and
are now so high,” the official said.
When contacted, the National Secretary, National Electricity
Consumers Advocacy Network, Mr. Obong Eko, stated that
NECAN would never support such move.
He described the move as the peak of insensitivity to the flight of
Nigerian masses.
He said, “They’ve been flying the kite for some time now because
the last time tariff review was done was when the exchange rate
for one United States dollar was about N190. But now, one dollar
is close to N500; and the price of gas in the international market
has gone up too.
“Despite all these, it will still be so unreasonable to come out to
announce an increase in tariff now that Nigerians are going
through severe suffering. Are they aware that people are dying of
hunger? We can never support such move and we will resist it.”