The Nigeria Employers’ Consultative Association (NECA) has thrown its weight behind the proposed hike in electricity tariff calling it a ‘necessity for power sector’.
The Nigerian Electricity Regulatory Commission has said the electricity tariffs being paid by consumers will increase in April this year, according to its ‘December 2019 Minor Review of Multi-Year Tariff Order 2015 and Minimum Remittance Order for the Year 2020,’ which was dated December 31, 2019.
According to a press release by the Director-General of Nigeria Employers’ Consultative Association (NECA), Dr Timothy Olawale stated that “though the proposed increase in tariff might cause a shock from the consumers’ perspective, it is, however, a necessity in order to get the power sector back on track. The issue of the tariff has remained topical in the sector since shortly after privatisation.
“While the customers have said tariff review should only take place after there has been an improvement in service, service providers have said for service to improve, the right amount has to be paid. The argument has always been the chicken and egg argument, a cyclical one. Putting the matter in context therefore, the issue of the increase is intended to enable the Sector to realise what can be described as the right price for the product. It is with this right that more investment can be attracted and consequently, improved service.”
Speaking further on the challenges of regular power supply and imperative for appropriate pricing of electricity, he noted that “tariff reviews are expected. There had been minor and major reviews to adjust all the variables that make up the tariffs such as generation volumes, FX price etc. All these play a role in determining the tariffs.
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“NERC for some reasons has delayed implementation of minor reviews that should normally occur bi-annually by regulation. The NERC tariff order in June 2019 took all these into account and adjusted the variables to ensure a cost-reflective tariff. Cost reflective tariff is important to ensure the provision of the commodity or service can cover Operational and Capital expenses and most importantly stay in business and deliver on service.
“While the Discos have had six minor reviews totalling 16 per cent, micro and macro-economic indices have affected the ability of the DisCos to meet their cost. However, the Generation Companies has had several reviews bringing their % increase to about 116 per cent”.
While urging the DisCos to justify the proposed tariff hike, Dr Olawale averred that “consumers and businesses are not averse to paying an appropriate price for electricity consumed. The major contention has been estimated and sometimes outrageous billing for power not consumed, implications on the cost of living and cost of doing business without a guarantee of commensurate improvement in the quality of service.
“The DisCos would do well to fast-track the provision of prepaid metres, the GenCos should ensure availability of Power for the DisCos to distribute and Government should support the DisCos to curb the rampant incidence of electricity theft across the nation. The NERC should live up to its responsibility and ensure strict adherence to the Regulations. While we note the political consideration that goes into the issue of appropriate pricing and the timing of same because of the multiplier effect of the hike on the society, we urge that the larger interest of the nation should guide all Stakeholders to enable Nigerians and the business community enjoy 24 hours uninterrupted power supply they crave for”
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