FG’s review of electricity meter costs and tariffs

RECENTLY, the Federal Government unfolded yet another chapter in its book of misery when it raised the cost of both single-phase and three-phase electricity meters by over 30 per cent, beginning from November 15. It announced this in a circular dated November 11, issued by the Nigerian Electricity Regulatory Commission (NERC) and addressed to the leadership of electricity distribution companies and meter asset providers. While the regulator raised the price of a single-phase meter from N44,896.17 to N58,661.69, it increased the price of a three-phase meter from N82,855.19 to N109,684.36. Apparently in a bid to assuage the anger of Nigerians, the government indicated that it had commenced the procurement of four million meters meant to be distributed free of charge to the estimated eight million unmetered power users nationwide. According to the Deputy General Manager, Consumer Affairs, NERC, Shittu Shuaibu, the meter asset providers, working with the distribution companies, had been able to deploy about 860,000 meters under phase zero of the mass metering programme. The programme, he said, is scheduled to run in three phases, namely phase zero, phase one and phase two. While phase zero was rounded off in October, phase one, involving the four million meter initiative, is ongoing.

In the same vein, Nigerians are now to pay more for electricity following plans by the Federal Government to carry out a review of power tariff. In a notice on the review of transmission loss factor in the Multi Year Tariff Order, NERC informed the general public and industry stakeholders of the commission’s intention to commence two key reviews, namely the Extraordinary Review of Transmission Company of Nigeria’s Loss Factor (TLF) in the MYTO and the processes for the December 2021 review of the MYTO – 2021. The December 2021 MYTO review, it said, is to consider changes in relevant macroeconomic indices, generation capacity and capital expenditure required for evacuation and distribution of the available generation capacity in compliance with extant rules. For good measure, the commission explained that pursuant to the provisions of the Electric Power Sector Reform Act, it adopted the MYTO methodology in setting out the basis and procedures for tariff reviews. The methodology provides for minor reviews every six months, major reviews every five years, and extraordinary tariff reviews in instances where industry parameters have changed from those used in the operating tariffs. Naturally, there was spontaneous public outrage over the decision.

It is difficult to  imagine that the NERC is interested in any part of its mandate that does not have to do with increased tariffs. It has canvassed the same arguments over and again in the face of the darkness imposed on Nigerians. For instance, in August last year, the NERC chairman, James Momoh, said that President Muhammadu Buhari had ordered mass metering of all electricity consumers in the country while waiving duty on imported meters to enhance the implementation of his directive. Nigerians then expressed hope that the presidential order would bring an end to arbitrary billing of electricity consumers by the distribution companies (DisCos). As it turned out, however, NERC’s promise was a hollow one and, worse still, President Muhammadu Buhari approved an electricity tariff increase effective from September 1, 2020, unleashing agony on the already beleaguered populace. As pointed out by the Organised Private Sector of Nigeria (OPSN) at the time, the tariff increase came at a time when the economy was facing a potentially deep recession and Nigerians were facing increasing hardships, with unemployment rising to over 27 per cent. Things have in fact worsened since then, yet the government is imposing another tariff hike.

In previous editorials, we counseled the government to pay subsidy to relieve the DisCos of the burden of  inherited debts and work towards emplacing a cost-reflective tariff, cognizant of the fact that they have to generate enough revenue to guarantee sustainability. We urged the Discos to invest in their networks and improve service delivery, since many of the inherited lines were weak and could not support electricity transmission. On  the issue of meters,  we urged the government to take away meter provision from the DisCos and give this to those with the capacity to deliver same. We also urged NERC to be alive to its responsibility and keep the Discos as well as other operators in the industry on their toes. Sadly, none of these has been done. Behaving like a captured regulator and rationalising the failures of the DISCOs, the NERC has failed to monitor their performance and apply sanctions when they fail to deliver on the agreed terms. The Ministry of Power is not bothered by the linear transmission system in the country while even the governors touting regional integration are not yet interested in the question of power transmission.

To be sure, the increase in the cost of prepaid meters and electricity tariffs amounts to adding to the burden of citizens who are already groaning under hyperinflation and weak purchasing power. Thus, the latest official action is an overkill. There is an apparent lack of empathy on the part of government for the impoverished citizenry.  The government consistently pays lip service to reducing the cost of governance and diversification of the economy.  Government officials have not dropped any of their benefits but the people are being subjected to all manner of tariff hikes. This is not how to build a modern state. The current tariff hikes are without empirical basis and should be suspended forthwith.

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