Electricity tariff: Will Reps’ pledged intervention see a reversal?

Earlier in the month, the Nigeria Electricity Regulatory Commission (NERC) approved the much speculated new industry tariff, a move justified by the Minister of Power, Adebayo Adelabu, repeatedly at different fora. JOSHUA EGBODO in this piece x-rays prospects of the pledged intervention of the House of Representatives

The new tariff regime

It was on April 3, 2024 when news filtered in that the much speculated increase in electricity tariff has been approved by the Nigeria Electricity Regulatory Commission (NERC). Executive Vice Chairman of the Commission, Musliu Oseni, announced the approval during a press conference in Abuja on that date, explaining that customers under classification under Band A, who receive 20 hours of electricity supply daily, will pay N225 per kilowatt (kW), starting from April 3, a figure which was up from N66 previously applicable, and about three times the existing rate.

“The commission sat and reviewed further the application by the distribution companies and have decided that only the 17 percent feeders and less than 15 percent customers will be affected by any rate increase that the commission will ever approve for the DisCos.

“Further to that, the commission has issued an order titled ‘April 2024 Supplementary Order’ which is supplementary to the order issued in December, effective January 2024. So, the April Supplementary order takes effect from today (April 3, 2024), and in that order, the commission has approved a rate review of N225 per kilowatt-hour for just under 50 percent of the customer population in NESI.

“So that means that less than 15 percent of the customers will be affected. And I am sure you are aware of the number of customers we have in NESI. And these are the customers that are proven to be enjoying 20 hours of average hours of supply”, he said, adding that the majority of the customers previously classified as Band A customers will not be affected.

Reactions

Even when the federal government, through the Minister of Power, Adelabu insisted that the resultant fallout of the tariff hike would be of greater benefits to the majority of customers, Nigerians were not satisfied, especially in the face of the current biting economic hardships. 

The Minister said the new tariff order will reduce 2024 electricity subsidy by about N1.14 trillion. He was to follow up with comments that Nigerians lack electricity conservation culture because of cheap tariffs, and that was to draw more intense outrage with calls for his removal. 

The outrage forced him to apologize on a live television appearance, saying “Anything we have said that are considered offensive, we are sorry about that…it was never intended to insult the sensibilities of Nigerians in anyway.

“It was an innocent advice with regards to energy consumption management which we believe will go a long way in reducing people’s energy bills. And that advice was directed at those that we believe that because of the recent increase in tariff, will start enjoying 20 hours of power per day”.

Effects clarified

With mounting pressure, NERC gave clarifications that the new tariff was not meant to affect all consumers in the country, but meant for customers on Band A, who enjoy about 20 hours of electricity daily.

Skepticism over compliance

Even with the clarifications, there were lots of skepticisms on the part of consumers, who do not believe that the regulatory framework was strong enough to monitor and shield consumers from being manipulated by the Distribution Companies (DISCOs) into lumping all into the Band A category in desperate profiteering bid. By NERC’s approved new tariff order, the increase should not affect Bands B, C, D and E.

Fears confirmed as AEDC is fined N200m

In a development which many saw as confirmation of fears of the consumers, the Abuja Electricity Distribution Company (AEDC), one of the DISCOs came under the hammer of NERC for wrongly billing its customers under the new tariff order. The sanctions include a N200 million fine and a directive that all the wrongly billed customers be refunded within a specified period.

NERC said its decision “follows a detailed review and customer feedback, which revealed that AEDC had applied the new tariff to all customer bands, contrary to the Order, which was designed to ensure fair billing practices”, directing AEDC to “Reimburse through the provision of the balance of customer tokens that the affected customers would be entitled to receive at the applicable rates and all token reimbursements shall be issued to the affected customers by 11 April 2024”.

The AEDC admitted the breach, which it blamed on a glitch. Apologising in a statement, AEDC said it was aware of the wrong charges faced by some customers who tried to recharge their meters following the new tariff regime. This is to inform customers across the Abuja Electricity Distribution Plc (AEDC) franchise that we are aware of the wrong charges faced by some Band A customers who tried to recharge their meters following the new tariff regime.

“This was due to a system glitch caused by the reclassification of some Band A Customers who have now been downgraded to Band B due to the number of hours of electricity supply enjoyed over the past few weeks”, it said, assuring that the customers affected would be refunded as directed by NERC.

AEDC also followed up with updates to its online interface system, giving customers the opportunity to remotely verify their band categories by inputting account number, meter number or both, to access the required information.

Minority Reps kicks 

As the debate raged, Minority Caucus of the House of Representatives made its intervention, describing the tariff hike as insensitive, inhuman and evil. The caucus said the hike was coming at a time when Nigerians are still grappling with the challenges of fuel subsidy removal, calling on President Bola Tinubu to prevail on NERC, to rescind the decision in the view that the welfare of the people should the priority of his government.

In the reactionary statement signed by Minority Leader of the House, Hon. Kingsley Chinda said the move was abrupt, as it “places an unbearable burden on the already strained populace, exacerbating economic hardships and widening the chasm of inequality”, saying “It is inhuman and evil”. The lawmaker noted that the hike was coming at a time when Nigerians are still grappling with the challenges of fuel subsidy removal.

“Such a hike, which is over two hundred per cent above the rate of inflation, utterly disregards the plight of ordinary citizens, who are grappling with the adverse effects of the removal of oil subsidy, galloping inflation, unemployment, and inadequate access to basic amenities.

“We note that in the immediate aftermath of the announcement of the tariff hike, NERC claimed that the hike affects only 12 per cent of electricity consumers who enjoy a minimum of 20 hours of electricity a day.

“Elsewhere in the global north, governments are doing all they can to protect citizens against the adverse effects of the pandemic on economies. In the United Kingdom, for example, where anti-subsidy proselytisers preach against subsidies, His Majesty’s Government has paid almost 40 billion pounds ($50 billion) in energy subsidies since it began to help households and businesses cope with the surge in power bills after Russia’s invasion of Ukraine”, he stated.

Also the House of Reps’ assurances 

As Nigerians continue to lament the effects, a seeming statement of reprieve came from the House of Representatives, a week ago assured them that it would wade into the matter as it resumes from its ongoing recess, hopefully on April 23, 2024. 

A statement through the media office of the Deputy Speaker, Hon. Benjamin Kalu, sad while he’s was speaking virtually on the special edition of “Ben Kalu’s Mandate”, a call-in radio programme of FLO FM, Umuahia, Abia state, on Monday April 8, noted that the parliament would find a way to resolve the issue.

Signed by the Chief Press Secretary to the Deputy Speaker, Mr Levinus Nwabughiogu, quoted Kalu as saying that the parliament would continue to conduct its affairs with the interest of Nigerians in mind. “It’s a general problem. While I was on my holidays, one of the things I was bothered with was a letter sent to me by the majority leader of the House on the need for us to intervene in a matter involving the University of Ibadan Teaching Hospital power supply. They were disconnected because of this hike and they don’t have the money to pay. We said it’s an essential service. Something should be done about it while we look at other details.

“I can assure you that when we resume, it’s one of the things we are going to look into. We will look at both sides of the coin to know a win-win approach to it because we cannot also suffocate the investors. We cannot allow Nigerians to suffer unduly. So, it is one of the things we will look at by the time we resume and we will find a way to solve it,” the statement quoted Kalu as saying.

Would there be reduction?

To many followers of past electricity tariff hikes in the country, it is most likely sure that there would not be any reduction in the increase, more that there are reported plans to roll out the new costs for other categories of consumers under the remaining Bands outside A. 

More worries are that the best the House of Representatives may do would be to pass a resolution, asking NERC to rescind the decision. The resolution, however, beautiful it may be, will have no force of law, leaving Nigerians still at the mercy of the DISCos. As the House resumes next week, Nigerians are waiting to see if there would be something different this time.