Biting power tariff back in disguise

By Charles Abuede, Onome Amuge, Zainab Iwayemi & Tobias Pius

• Hit Nigerians hard with outrageous bills‭, ‬rapid depletion of energy units
• Consumers blame the government‭, ‬regulatory authority

The power sector in Nigeria has had its myriads of challenges prior to the Covid-19 pandemic. But the health crisis only made it more glaring as Nigerians continue to experience rising and erratic electricity tariff that is now hitting them hard.

The sector experiences poor liquidity across its value chain, which can be partly linked to a history of non-reflective cost tariffs, prior to a revision in December 2020; as well as consumers’ apathy to payment in view of estimated billing and poor power supply.

The sudden adjustment in January, 2021 came as a rude shock to many concerned Nigerians who woke to the news of a supposed 50 per cent hike in electricity tariffs by the National Electricity Regulatory Commission (NERC) following the revision of the Multi-Year Tariff Order (MYTO), which was signed by Sanusi Garba, the NERC chairman.

Following the reactions which trailed the planned adjustment, the intended tariff hike was put on hold; but which the regulatory commission then said will come into effect after due consultations with relevant stakeholders and labour union have come to a close.

However, barely three weeks after that decision to suspend the planned tariff hike was announced, it would appear that electricity distribution companies took their own decision to still get their money by hitting the average Nigerian with a rise in estimated billings across the country, as well as ensuring that electricity units bought by consumers on pre-paid metering plan ran down faster than usual. 

The tariff increment could not have come at a worse time with the Nigerian economy currently in recession, the purchasing power of the average citizen significantly eroded across all classes of income and the poverty situation becoming worse by the day. Inflation is spirally and is currently above 15 per cent.

Further afield, industry sources have suggested that about 47 per cent of Nigerians does not have access to grid electricity and those that have access, face regular power cuts.

Okwara Udensi, chairman of the Manufacturers Association of Nigeria (MAN), Edo/Delta branch in Benin, expressed pessimism over the proposed electricity tariff increase. He said the current economic recession bedevilling the country is an indication that an adjusted price increase will adversely result in a surge in production cost which will, in turn, raise the cost of manufactured goods. He warned that many companies could be forced to become redundant as people would not be encouraged to buy manufactured goods at higher costs.

Business A.M., in its recent analysis of the situation, noted that the demand from commercial electricity consumers have weakened due to social distancing rules that have increased work-from-home activities, while the demand for residential consumption has increased simultaneously.

Dele Isaac, who lives within the Ikeja area of Lagos State, which is under Ikeja Electric, lamented the excessive bills issued to him amounting to N45,000 for a month, an amount he considers to be outrageous. He said that he uses energy-saving appliances in the house, yet under two months of relocating to the area, he has received bills of over N40,000 monthly.

Moses, an auto-technician who uses prepaid metre in Olodi-Apapa area of Lagos, which falls under Eko Electricity Distribution Company, told Business A.M that prior to the proposed tariff increase that sparked reaction in early January, N3000 worth of electricity payment could last for over 45 days due to the low tariff and usage. However, Moses stated that since the start of the year, the rate of depletion has become alarming as energy value worth N3,000 depletes so fast under the same usage conditions. “Currently, I pay N10,000 for just a month and few days under the same condition of use for my prepaid meter plan,” he said.

In a related development, Jessica Kuraun, a President Muhammadu Buhari support group member last Thursday, came out and issued a plea on behalf of the group, who strongly condemn what she called “insensitive and very high” electricity tariffs in the country; that has still crept its way into their bills, adding that quashing the increase will give a majority of Nigerians relief from the difficulties.

The latest show of concern towards consumers’ plight was when an uproar was raised across the country in January about hikes initiated in line with a revised MYTO. Sanusi Garba, chairman of NERC, and Dafe Akpeneye, commissioner, legal, licensing and  Compliance signed on December 31, 2020, and indicated it will take effect on January 1, 2021, with a 50 per cent increase reflecting on it, what seemed like an assurance from the authorities through a clarified statement order on January 5, 2021, marked NERC/225/2020 and highlighting that the commission had not approved a 50 per cent increase in electricity tariffs, saying: “The commission states unequivocally that no approval has been granted for a 50 per cent tariff increase in the tariffs order for electricity distribution companies which took effect on January 1, 2021.” It still doesn’t appear as the sting of the tariff increment has actually left the skins of most Nigerian power consumers.

That same outrage is again about to be heard, which appears to have covertly found its way into the bills of Nigerian consumers. Nigerians spend an estimated $14 billion a year on purchasing and fuelling small-scale generators. On social media (Twitter), a handful of Nigerians have come out to pour their displeasure about the hike still lingering, despite claims it had been shelved.

Sobowale, via his Twitter handle, said “Every other country in the world is trying to mitigate the global economic situation but Nigeria is throwing more and more burden on her citizens. Now, in the space of 6 months, they have increased the electricity tariff twice.”

Also, Adebanqie lamented that: “New Electricity tariff hike, VAT increases, Petrol price increase, Snowballing inflation rate, Skyrocketing Unemployment rate and then, there is a recession. All, from the stables of President Buhari!”

Similarly, Jide David, a resident of Egbeda area of Lagos said there has been almost 100 per cent in electricity bill. “We do not use the prepaid meter. Sometimes, we get favourable bills and sometimes, the unfavourable bills. Recent bills have been abnormally high. For instance, in my own apartment before now, I used to pay N1000 or less monthly but now it is like N1800, N1900 within these past few months,” he said.

“I noticed that recent bills have always been high. Prior to this period, around October, we have always been receiving bills not less than N6000 and the maximum we have received on the average is N10000. About two months ago, they distributed N16000 as electricity bill, but subsequent billings have been N10000,” Ahmed Bolaji, who resides in Ikorodu area of Lagos State, told Business A.M.

Nneka Okeke, a dealer in frozen fish, turkey and chicken, said that she uses electricity in powering her refrigerators to keep her food items properly stored and preserved. She explained that despite the unreliable power supply in her store, she is forced to pay for electricity bills which are oftentimes high, as electricity is very essential and indispensable in the type of business, she is engaged in.

Recounting her January payment, she said the amount she was charged was much higher than that of December despite not getting improved electricity supply. Okeke further lamented that she was being charged based on estimated billings and every attempt at getting a prepaid meter to monitor her electricity usage has been to no avail.

A horde of Nigerians is already letting out its pains, with calls to key stakeholders to intervene rationally and take their oversight more seriously.