Editorial
On That Hike In Electricity Tariff
As part of steps being taken to reform the nation’s ailing power sector, the Federal Government recently announced an upward review of electricity tariff in the country from N8.50 to N10.00 per kilowatt hour with effect from last Friday.
Chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi, who made the announcement, said it is in accordance with the last schedule of the 2008/2013 regime of the Multi-Year Tariff Order (MYTO), which was introduced to ensure that electricity prices are predictable in the country, and to make the industry more attractive to private investors who have expressed concern that electricity tariff in Nigeria is among the lowest in the world.
According to reports, the NERC announcement was the outcome of a meeting, early last month, between the electricity regulatory body and chief executives of the 11 power distribution companies (DISCOs) in the country.
Apart from a review of the MYTO pricing regime, the meeting was also said to have deliberated on the modalities for the administration of the N177 billion earmarked as subsidy under the Power Consumer Assistance Fund (PCAF) of which N43.9 billion has already been released by the Federal Government for onward distribution to beneficiaries.
Any keen industry observer would readily discover that the latest tariff hike is indeed a deviation from the electricity commission’s earlier assurances that it will not increase price until there is a marked improvement in power supply.
At present, the nation’s total power output is about 3,100 megawatts, having recently fallen from 3,700 megawatts due to a reduction in generation from the electricity plants of Power Holding Company of Nigeria (PHCN).
In fact, PHCN blames the current nationwide load-shedding on the ongoing maintenance work at Utorogun Gas Plant which has resulted to a shortfall in gas supply by the Nigerian Gas Company (NGC) to the thermal power stations at Egbin, Geregu and Olorunsogo.
Again, the power company claims that its inability to remedy the shortfall in thermal electricity supply through hydro generation has been severely hampered by the sharp drop in water level at some of the nation’s dams.
In view of the above circumstances, The Tide wishes to state that now is hardly the appropriate time for NERC to embark on a tariff hike, however marginal such may appear.
We say so in the belief that Nigerians have already had it up to their neck with regard to the plethora of flimsy excuses for which the mammoth electricity monopoly called PHCN is now known.
Electricity consumers may be willing to accommodate a marginal increase in tariff if only such is coming with a corresponding improvement in service delivery. This would have been more so if the system had ensured a conclusive distribution of prepaid meters to customers to ensure that they pay for what they actually consume rather than the current method of arbitrary billing by PHCN.
It is very disheartening to realise that Nigeria is still talking of how to attract investors in the power industry after three tariff increases within a decade. This, indeed, is shameful because it is happening at a time when Ghana, a fellow West African country, has just celebrated 10 years of uninterrupted power supply!
Even more disturbing is the fact that many multinational firms that were once operating in the country have since relocated to such other African countries where there is steady supply of electricity. What this means is that the employment chances, tax revenues, product and service availability, and host-community project development opportunities have also been lost.
We also fear that Nigeria stands to lose even more manufacturing outfits if the latest hike is not quickly followed by an improved power supply arrangement. This is because of the deregulation processes being undertaken simultaneously in the petroleum and power sectors.
For the manufacturers, the epileptic power supply means that they have to depend heavily on petrol and diesel for their private power generators. And with the pump prices of these products being constantly north-bound, coupled with their intermittent scarcity, any new increase in electricity tariff is sure to reflect on the prices of goods and services.
To be sure, rather than serve as a standby equipment, electricity generators have since become the primary source of power for industrial firms, some of which have had to run theirs for 24 hours a day. Again, even as they incur huge costs doing so, they still have to pay outrageous monthly electricity bills.
Indeed, the government meant well by pursuing a power sector reform which is aimed at stabilising electricity supply, improving cost recovery and attracting investment capital, but The Tide fears that this may still turn out to be one of those impeccable blueprints that became so badly executed as was witnessed during the inconclusive probe of a $10 billion power sector fund, recently.
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