On Monday August 19th 2013, a crop of young civil society activists and the representatives of several print and electronic media gathered at the Bolton White Hotel in Garki, Abuja with a common purpose in mind – to brainstorm on how to reduce Nigeria’s high cost of governance.
Predictably, the special guest speaker turned out to be the very outspoken erstwhile Federal cabinet minister in charge of Education and also solid minerals during the President Olusegun Obasanjo’s administration (1999-2007) – Dr. (Mrs.) Oby Ezekwesili. Expectedly, she thrilled the audience with her erudition and delivered a profoundly professorial presentation on the challenges of under- development that confront Nigeria and one of them was the ever present problem associated with the disappearance of the real/manufacturing sector of the Nigerian economy which to a lot of experts is easily attributable to the high cost of production.
Incidentally, the poor electricity power supply situation is the key factor responsible for the closing down of most manufacturing firms that found it almost impossible to finance the exorbitant cost of providing electricity through independent power sources.
The Nigerian state in the last 14 years, said it invested substantial amount of public fund running to over $16 Billion USD into the ever inefficient electricity sector but the local consumers still lament that poor electricity supply has remained the fundamental cause of their economic nightmare.
Determined to implement lasting panacea to this lingering electricity power poverty, the Federal government has decidedly privatized the former publicly owned Power Holden Company of Nigeria (PHCN) and the National Electricity Regulatory Commission (NERC) was re-organized by President Goodluck Jonathan who appointed a core of young but tested and trusted technocrats and statemen including the United States -trained lawyer Dr. Sam Amadi who is the executive chairman of the newly reformed and transformed NERC.
As part of its regulatory oversight NERC recently disclosed that the electricity tariff would be reviewed to attract good investors who would agree to invest their resources and talents to revive the dying sector because without good pricing environment, willing investors may be scared away because they would be unsure of how to recoup their investments.
The move to hike the tariff has come under considerable challenge by a number of Nigerians who are afraid that the prevailing atmosphere of poverty may not allow most Nigerians to afford the high cost of electricity.
But NERC through a recently released statement has clarified the situation and asked for public understanding just as the agency assured poor electricity consumers that Government has set aside princely sum of money to subsidize electricity to the teeming poor populace.
The Assistant General Manager of NERC Ms.Maryam Yaya Abubakar who signed the extensive release explained that the Nigerian Electricity Regulatory Commission (NERC) has noted the comments of Nigerians on the recent increase in the fixed charges for some class of customers, including a recent story in the press attributing comments to the President of the Nigeria Labour Congress, Comrade Abdulwaheed Omar, that centred around a purported arbitrary increase of an unstated and undefined charge from =N=225 to =N=700.
Questions, she said, have been asked as to why such ‘increase’ at this time and the rationale for charging fixed charges for electricity consumption and she never wasted time to respond to the interrogatory that as a responsible regulator the agency is committed to respond to the concerns raised by consumers in print and electronic media and through social media.
The spokesperson of the Nigerian Electricity Regulatory Commission stated that the agency considers it of utmost importance to always explain to the consumers that the tariffs they pay are fair, reasonable and necessary to guarantee continuous improvement in electricity supply to Nigerian homes and businesses.
NERC, she said, wants to make it clear that since 1st June 2012 when the second edition of the Multi Year Tariff Order (MYTO 2) came into force, it has conducted two Minor Reviews and published its findings on 1st December 2012 and 1st June 2013, as required by the law.
Speaking further she stated that a Minor Review under the Multi-Year Tariff Methodology published by NERC in 2012 involves an examination of interest rates, exchange rates, inflation rates and available generation capacity during the preceding 6 months; and if these report a change of plus or minus 5% individually, such change will be applied to the tariff published for each distribution company.
Bringing the technicality of her explanation to the ordinary person’s everyday mode of expression, Ms. Maryam Yaya Abubakar stated clearly that the two Minor Reviews conducted by NERC did not result in any increase of tariff because the indices stated above and the fundamentals of the MYTO, as shown in the Methodology and the financial model available published in full on NERC’s website have not significantly changed.
The commencement and results of both Minor Reviews, she affirmed, were announced via various national print and electronic media, including some that have carried various provocative statements that bear absolutely no connection with the truth.
She then proceeded to present the entire scenario in broader perspective thus; “The changes that some customers have belatedly noticed in their electricity bills were announced by the commission on 1st June 2012. The MYTO stipulates tariffs for the 5-year period from 1st June 2012 to 31st May 2017 based on the expected cost of generating, transmitting and distributing the electricity for homes and businesses during these years”.
“This means that the tariff order issued to every distribution company has an approved tariff for 2012, 2013, 2014, 2015 and 2016. Except there is a Minor Review of the MYTO, which takes place semi-annually, with results announced on 1st December and 1st June each year, each distribution companies is authorized to collect only the approved tariff announced by NERC. An examination of the tariff tables for the respective eleven (11) distribution companies that were nationally published last year shows all the tariffs for the period 2012 – 2017. The total electricity tariff paid by all consumers in Nigeria comprises a single monthly fixed charge and a variable energy charge that is based on consumption”.
She further broke down the details of what the commission considers as fair and reasonable pricing regime thus; ” It must be made clear that for residential customers who use either single-phase meters or three-phase meter (R2), the fixed charge approved under MYTO is N500 for 2012 and N700 for 2013″.
As days go by, it is expected that NERC will engage the civil society community further to throw more light on the unfolding revolutionary steps being put in place by government to deliver uninterrupted electricity power supply to all Nigerians at fair and reasonable price. One way out of the current difficult debate over electricity power tariff is for NERC to sign public social contract with Nigerians to ask Nigerians to give the regulator twelve months to see if the new pricing regime is unable to achieve the lofty objectives for which they were set in the first instance.
Written By Emmanuel Onwubiko
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