Increased Electricity Tariff Not Guarantee For DISCOs Efficiency

ILL OKEKE

Increasing electricity tariff will not guarantee light or efficiency. Rather, it will amount to adding more burden on consumers that are not even getting value for money they pay to get light.

The Director General of the Federal Competition and Consumer Protection Commission (FCCPC), Tunde Irukera, stated this at both the Eko DISCO and Ikeja DISCO public hearing at the Lekki Events Centre and Summit Hotel Alausa respectively.

The DISCOs had on Tuesday and Wednesday, at separate events, made proposals to the Nigerian Electricity Regulatory Commission [NERC] for upward review of electricity tariff.

Taking a swipe at the management of the DISCOs in the halls filled with NERC officials, stakeholders in the energy industry and mostly unsatisfied consumers, Irukera said he would not even score them pass mark, as there is complete general energy inefficiency in the industry.

Iruekare said the Discos have failed on the mutual agreement to assign metres to all Nigerians and increasing tariffs means increasing burden of a broken inefficiency by the service provider on the consumer. He urged NERC to constitute a framework that would protect consumers.

Condemning their proposal to increase energy tariff, the DG described the action as insensitive. “It is simply another way of over stressing the responsible payers with additional burden of paying more.

Consumers are not getting the light they are paying for and you are talking of increasing energy tariff. It is just a case of adding salt to injury. How will the increase in tariff guarantee light?” he questioned.

He noted that the DISCOs would have to address the issues of metering and estimated crazy billings, which are major concerns of the customers, instead of only addressing its low revenue generation.

Speaking further, he cautioned the DISCOs against the belief that constant power supply would only be available when tariff is increased.

Lamenting that the proposals to NERC did not even mention what the DISCOs have always complained as their major concerns, he said the proposals only mentioned one, which is low revenue generation, leaving out energy theft, and how to abridge the gap in metering.”If you are going to promote efficiency, address these issues.

“When more people are metered, you will generate more money, when energy theft is stopped your revenue will increase and when people get steady supply of light they will be happy to pay,” said the DG.

The DG, who was getting applause from the consumers as he was speaking, noted that “The framework as it is today does not encourage people to pay more. Consumers are not resisting paying a fair price. We do not receive complaints that the bill is high, they complain that they do not get light and yet they are billed.

“They do not resist a fair transparent bill but asking them to pay for what they do not get is wrong. There is no law that justifies making people pay for what they do not receive.”

Irukera warned that “any increase in tariffs without proper commitment to metering is already problematic, as you don’t exploit consumers as it is.

The reality of it is that people want transparent thing and want to pay for what they consume. Hence, estimated billing has become arbitrarily crazy. How do you fight a cost regulation tariff when your billings are based on assumptions?”

The chairman at the two public hearing, Commissioner, Finance and Management Services, NERC, Nathan Rogers Shatti, said that the commission on Monday set up a cap to protect consumers from crazy billing by the service providers, when it instructed the distribution companies not to charge the consumers beyond the cap set.

Shatti said with the current metering gap of over five million consumers, the cap measure was imperative. He pointed out that though, as regulators, setting tariff was easy, but that the commission could not do so without getting the contributions of the general public and stakeholders, hence the need for the hearing, where, “The discos would present their application to Nigerians, the stakeholders and consumers can ask of the benefit from the proposed investment.

“As regulators, we will harvest all the contributions from all sides and review before arriving at a decision on the application of the DISCOs.

Due to the issues around estimated billing, which consumers tagged crazy billing, the commission agreed that the billings are not done properly and just on Monday, we came up with a cap and instructs every distribution company not to charge the consumers beyond the cap we have set,” stressed Shatti.

This is not to solve the metering issue, he added, but it is a transitional measure to fasten the process. “We know that having metres is important for the industry, it is a revenue protection for the service provider and it is good for the consumer.

But while we are working on ensuring Nigerians get these metres, we came up with this capping to ensure that there will be no more estimated crazy billing. This means that every consumer must not pay above what his neighbour who has a metre pays.

“This has taken effect and the distributors have the next two years to metre all Nigerians. Pending when this is achieved, we will ensure that Nigerians are not exploited.”

Meanwhile, the electricity Distribution Companies, DISCOs, on Wednesday declared that they have not received any subsidy from the federal government since the power sector was privatised in November 2013.

The 11 distribution companies operating under the aegis of Association Nigerian Electricity Distributors, ANED, through a statement by its Executive Director, Research and Advocacy, Mr. Sunday Oduntan, insisted that none of the companies ever received subsidy from the government.

Apparently reacting to the remarks credited to the Minister of Power, Saleh Mamman, to the extent that the federal government will not continue to subsidise the power sector, ANED said government only made payments to the generating and gas supply.

According to Oduntan, “To date, the DISCOs have not received any subsidy from the federal government. References to the N1.7 trillion in subsidies paid by the government are associated with payments that have been made to the generating and gas supply companies, under the Payment Assurance Guarantees, PAG, initiative and the Nigerian Electricity Market Stabilisation Fund, NEMSF.

“As a matter of fact, NERC’s December 2019 Minor Review Order specifies federal government debt to the DISCOs, correspondingly, the rest of the NESI value chain), due to tariff shortfalls, of N1.728 trillion. DISCO’s liability to NESI, due to market shortfalls, is N81 billion.

“Significantly, government Ministries, Departments and Agencies (MDA) owe the DISCOs in excess of N100 billion, for energy consumed but not paid for – a federal government commitment, yet again, unmet under the privatisation agreement and MYTO-2015.