Public electricity tariff is heading for the stars. In the two years since the electricity distribution companies (Discos) rose from the ruins of the defunct Power Holding Company of Nigeria (PHCN), power tariff has been hiked three times. The current rate of tariff hike might soon make public power as expensive as generating electricity from mini generators.
Before the privatization of the power sector, the cost of generating one kilowatt hour of electricity by mini generators was estimated at N50. Public power at that point was N6.
Last week the Nigerian Electricity Regulatory Commission (NERC) contemptuously flagged off a new public power tariff regime that is almost half of the cost of generating power from micro generators.
With effect from February 1, 2016 electricity consumers in Abuja would be paying N23.60 per kilowatt hour of electricity. They were paying less than N14 before the jumbo hike. Consumers in Lagos who are serviced by the Eko Distribution Plc would be paying something slightly above N23.
The cost of electricity under the new dispensation is measured by the level of poverty and inefficiency of the distribution company involved. The poorer Discos demand higher tariff because the consumer is their only source of income. NERC and the Federal Ministry of Power, Works and Housing which collaborated to increase consumers’ burden believe that the jumbo hike would put Nigeria on the path to steady power supply.
The same argument was advanced to justify the hike from N6 to N12. Last week statistics from the Ministry of Power suggested that power generation has risen above 5, 000 megawatts (mw). No one doubts the statistics from the ministry. The truth however is that the increase in power generation is not reflected on supply to individual homes. Most parts of the country do not enjoy power supply for more than seven hours in a day. The logical conclusion is that the Discos lack the capacity to distribute what is generated. The situation might persist in view of the liquidity crunch plaguing the Discos.
Consumers are yet to witness the long-expected improvement in power supply. At the moment all that everyone can see is surging tariff and plummeting supply. At the current rate, tariff in Nigeria may be one of the highest in the world. A friend of mine who lives in a four bedroom duplex in the American city of Lynn, Massachusette pays $50 (N10,000 at current exchange rate) per month for power supply. He uses power for 24 hours a day and heat his home round the clock during winter. That could result in the use of more than 500 kilowatt hours of electricity in a month. At the current tariff, 500 kilowatt hours of electricity in Nigeria amount to N11, 800 compared to N10, 000 in the U.S.
The regulator is happy that the slush funds that the Discos used to relish from the dubious levy tagged fixed charge has been yanked off and that consumers are now paying for what they actually consumed. However, the cost of what is actually consumed is now higher than what obtained during the days of the dubious levy. Besides, even with the jumbo hike, consumers are still bearing the cost of installing distribution equipment like transformers, and replacing ageing distribution lines when they snap. A transformer donated by the local government to a community in Alakuko, Lagos State, is yet to be installed almost one year after it was donated. The community had been reluctant to pay the huge cost of installing the transformer.
The residents grudgingly obliged when Ikeja Electric threatened to take the transformer to a community that is willing to pay the cost of installation. The residents association imposed a levy of N4, 000 on every household, just to raise the money for the installation. Work on the installation which is handled by a contractor imposed by the Disco, has been stalled for more than a month now because some of the impoverished residents cannot raise N4, 000.
The irony of the jumbo hike is that as the Discos themselves recently admitted, loyal consumers are billed for the crimes of corrupt public office holders, and some dubious residential consumers.
The Discos argue that only 40 per cent of the power supplied in Nigeria is paid for. The armed forces and the police hardly pay their electricity bills. They terrorise electricity company officials who try to disconnect their lines for failing to pay their bills. Federal government agencies on essential and sensitive duties shun their bills and dare the power suppliers to disconnect them with dire consequences.
Rather than compel the criminals to pay their bills, the regulator is visiting their sins on law-abiding consumers by factoring their debts into the new tariff.
The federal government can compel its lawless agencies to pay their bills by deducting the money at source. However, hapless consumers who have endured decades of darkness along with the noise and environmental pollution of private generators are grudgingly paying the bills because public power is a better evil despite the escalating tariff. It is still cheaper and cleaner even if it might not put Nigeria on the long, tortuous road to regular power supply.
