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Business & Finance

Power Firms Want 200% Increase in Tariff

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This is coming less than eight months after about 45 per cent increase in tariff was imposed on electricity consumers nationwide.

The power firms attributed their latest push for tariff increase to high inflation rate in the country, scarcity of foreign exchange, devaluation of the naira and the huge debts being owed them.

Already, the Discos said they had hinted the Nigerian Electricity Regulatory Commission about the proposal but no action had been taken on it yet.

The Chief Executive Officer, Association of Nigerian Electricity Distributors, an umbrella body for the Discos, Mr. Azu Obiaya, confirmed the latest agitation for tariff increase, in an interview with our correspondent, stressing that it was important to raise the tariff in order to remain in business and serve the people well.

Azu said, “To review the tariff, we will be looking at an average rate of N70 per kilowatt-hour for residential consumers. But some Discos will like to have the rate as high as N105/kWh.”

Each Disco has a fixed energy charge payable by its customers. The highest charge, according to documents obtained by our correspondent from NERC for the year 2016, is N32.26/KWH and this is payable by R2 consumers under the Jos Electricity Distribution Company.

The lowest energy charge of N15.83/KWH is payable by R2 customers who get power from Ikeja Electricity Distribution Company.

A further analysis shows that the average energy charge for all the 11 Discos is N22.8/KWH.

But the Discos were said not to be comfortable with the current rate, as they argued that it was not cost reflective and was hampering the required expansion of infrastructure as well as the smooth flow of operations.

Azu, who spoke to our correspondent on the sidelines of a power dialogue in Abuja on Thursday, said the debts owed power distribution companies by private homes, businesses and government ministries, departments and agencies post-privatisation amounted to N568bn.

He also stated that one reason many Discos had not metered their customers was due to the huge debts owed them, as well as the tariff issue.

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This, he said, had hampered the operations of the different Discos, a development that had made it difficult for the companies to meet the funds remittances required of them by the Market Operator.

Obiaya said, “Discos are experiencing revenue shortfall on a monthly basis of N38bn. As of June 2016, the MDAs owed the Discos N53bn post-privatisation.

“The books of the Discos are so bad that they have no chance anymore to access finance. These books do not reflect the cash flow that is necessary for them to be taken seriously by any lender.”

A senior official at NERC told our correspondent that although the Discos had been calling for an upward review in tariff, the regulator had not considered their demand.

“The minor review of tariff is ongoing at present but NERC has yet to consider their plea for such increase in tariff, although the economic fundamentals in Nigeria have seriously changed and are now so high,” the official said.

When contacted, the National Secretary, National Electricity Consumers Advocacy Network, Mr. Obong Eko, stated that NECAN would never support such move.

He described the move as the peak of insensitivity to the flight of Nigerian masses.

He said, “They’ve been flying the kite for some time now because the last time tariff review was done was when the exchange rate for one United States dollar was about N190. But now, one dollar is close to N500; and the price of gas in the international market has gone up too.

“Despite all these, it will still be so unreasonable to come out to announce an increase in tariff now that Nigerians are going through severe suffering. Are they aware that people are dying of hunger? We can never support such move and we will resist it.”


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