Leadership (Abuja)

14 July 2012

Nigeria: New Tariff Regime - Paying More for Darkness

analysis

Barely a month after the Nigerian Electricity Regulatory Commission (NERC) introduced what it calls Multi-Year Tariff Order 2 (MYTO 2), the alarm raised by the electricity consumers in the country is disturbing if not threatening. LEADERSHIP WEEKEND sampled opinions from some states across the country and the cries came loud from the poor in the rural villages to the rich in the urban cities; from petty traders, to the business moguls in the industrialised urban. The verdict is that the new tariff regime is choking, and what's more, stable power supply is still not in sight. Ben Ndubuwa, Lagos, Solomon Ayado, Makurdi, Bernard Tolani, Akwa Ibom, Stanley Uzoaru,O werri, Usman Ahmed, Kaduna, Salisu Ibrahim, Kano and Anietie Udobit, Abuja report.

According to members of NASME who spoke to LEADERSHIP WEEKEND and are mainly in R2, C1and some in R3, the increase was a total disregard to the well-being of their businesses.

These consumers in Lagos see the new tariff as a way of compelling people to pay more for darkness and also paying for what they did not consume. Mr. Kamarudeen Bolajoke who owns a small shop that deals on glass cutting and processing in Mushin, Lagos angrily told LEADERSHIP WEEKEND that one month after the new increase, PHCN officials brought a bill of N7,100.00 as against the previous month of N2,800.00.

According to him, the new bill is just out of the world and that he has decided that PHCN officials should come and remove their wires and electric polls from his shop because he will rather stick to buying diesel to run the generator for his business rather than continue with such bills.

'It is placing more of a burden on the few Nigerians who pay their bills regularly' he said. According to him, it was even difficult to break even with the previous bills because he runs the generator almost 24 hours a day spending close to N2,000.00 on diesel on a daily basis as the power supply from PHCN was almost non-existent.

On his part, Mr. Kunle Titiloye of Jeatson Prints, in Mushin, was not happy at the constant power outage that has continued despite the new tariff.

He hoped that the government propaganda on tariff review is not another deceit to make people pay more. He said that his shop hardly had one hour electricity supply in seven days. "Yet we pay exorbitant bills at the end of the month even when we know that we have not consumed. We pay between N 4,200 to N 6,200 on monthly basis compared to N 15,700 that was brought by PHCN in this month of July.

Government should stop deceiving Nigerians that the new tariff is to ensure cost effectiveness and that some category of consumer will pay less but what we are witnessing is that people are paying more now' he said.

According to Mr. Kayode Olugbenga, a welder in Egbeda area of Lagos state, some consumers in Egbeda who paid for metres seven years ago have not been supplied with metres by PHCN. He said that in his own case, he paid for a metre long ago and he has not collected it.

'PHCN keeps on saying none is available. Every month they bring an estimated bill to me that ranges from N8,000.00 to N15,000.00. The most painful aspect of it is that I do not make that kind of moneyevery month' he said.

Mr. Emeka Ikechukwu, a member of the Manufacturers Association of Nigeria (MAN) told LEADERSHIP WEEKEND that he runs a sachet water factory and because he always strives to meet his customers' demands, he has therefore reduced his dependency on public power supply.

"As you can see I have three generating sets. So I do not bother myself whether there is power from PHCN or not. All these 'stories' about government improving power supply when tariff is increased do not appeal to me. Is it today we have been hearing that type of propaganda? Well, I wish them good luck. I have a pre-paid metre. Is it not when I like that I will buy card for the metre? After all, the light in this area is not constant.

At times we don't see light for a whole week. So what is the point' he queried.

However, he noted that most consumers are suffering the pain. According to him some of the members of the organized private sector cannot break even with the epileptic power supply.

According to Ikechukwu, many members of NASME are also stakeholders in the power sector and that makes it imperative for government to begin to put in place structures that will further enhance the fortunes of businesses and other consumers.

Meanwhile some rural dwellers who NERC said they are in the R1 category said that they are still receiving estimated bills.

According to NERC, the rural dwellers are to pay about N4.00 per kilowatt as against N7.00 per kilowatt hour. But they (R1 group) said that even with their metres, their bills have suddenly gone up. Some noted that they received estimated bill this month.

Mrs. Toyin Adebambo, a petty trader in Sango Ota market said that government has failed to listen to the yearning of the poor masses.

Bottled up anger in Kano

For a long period of time, electricity consumers in Kano have bottled up so much anger in them, until last week when a group of such disenchanted consumers decided to release the tension by trooping out to the street to demonstrate their displeasure over frequent outage of power, increased tariff of electricity rates and absence of electricity in some cases due to discriminatory supply.

"Our patience has been overstretched", one of the consumers who organised the protest said in an anger-laden tone. "There is no light in Kano, we have been in perpetual darkness and most of the industries that provide employment to our youths have closed shop.

The worst is that some parts of the metropolis will have light frequently and some would remain in perpetual darkness," Malam Sunusi Ibrahim Zaki told our correspondent.

He said the organised protest was to register people's grievances because while there is acute shortage of electricity supply in some areas some areas are enjoying full supply on daily basis. "I don't know whether we have two cities in one", he complained.

"There is a place we use to call Abuja because of the frequency of electricity supply in the area, this area get light for almost twenty four hours because hardly you go there without seeing electricity, the area is always with light while other parts of the city are in perpetual darkness".

Zaki who hails from Fagge Local Government Area of Kano Metropolis said "I can hardly recall when last I see electricity that stays up to good two hours in this area.

We use to stay up in the night without electricity supply. Our children cannot sleep well because of severe heat. We are only lucky this time around is a rainy season, the town is a bit cool, if not because of that I wonder how we can cope with the over three week non supply of electricity for even a single minute. It is horrifying as if we are not Nigerians".

Malam Sabiu Abdu Hotoro who also shares the same sentiment with Zaki also said that lack of electricity supply had had adverse effect on the state and its people.

Sabiu said that "even the security situation was worsened because of the persistent darkness in the metropolis and people have been forced to bear the brunt. "We are afraid to even come out in the night and pursue our legitimate work, the town is dark and you don't know whether you will meet with criminal elements as you come out", he said.

NERC boss told LEADERSHIP WEEKEND in a text message that he never said that there are no R1 group in any part of the country according to some reports. 'I did not say R1 does not exist. I said some DISCOs may not have many R1, like Eko DISCO where every consumer consumes more than 50 mwh per month' he said.

On estimated bills. He explained that estimation will continue. 'Until you have meters' he said. According to him there is an on-going consultation with the public on estimated billing and to develop a methodology that makes estimation accurate.

Mr. Reginald Odiah Chairman, Infrastructure, Manufacturers Association of Nigeria (MAN) told LEADERSHIP WEEKEND that the new tariffs for R2 and C1 which is now 11 and 12 naira respectively plus a fixed charge of 500 naira per month are in order and well thought out.

However, the issue of putting the cart before the horse is our concern. NERC has sufficiently explained reasons for review of tariff and we believe them.

The question is when will we begin to have constant Power? If there is no answer, then the new tariff structure for the categories in question can only further make life difficult for Nigerians that fall under these categories. In real terms all hands must be on deck if we are to achieve results' he said.

The Director General, Nigerian Association of Chambers Of Commerce, Industry, Mines and Agriculture (NACCIMA), Dr. John Isemede corroborated what the MAN boss said about the organised private sector needs constant power supply and if government cannot achieve this in the possible near future, then the new tariff structure for the categories in question can only further make life difficult for

Nigerians and their various businesses.

'Constant power supply is just one aspect of the whole expectations of the business community. There is the issue of multiple taxes all over the country, the roads are bad. Right now it cost our members more to move goods by road from Lagos to Ibadan than to import the same goods from China or Japan 16,000 kilometers away into Nigeria.

You can imagine if the same goods are to be transported from Lagos to Kaduna or Maiduguri,' he said. According to him government should not kill businesses because they want to revive the power sector.

'We are in competition with other manufacturers all over the world. To compete effectively is to take up the world. So for us to be able to compete effectively the cost of production which is about 40 percent here must come down.

The cost of borrowing in the bank is about 30 to 35 percent as against 3 percent of that of our competitors in the far East Asiatic Countries should also be considered not only hiking the electricity tariff' he said.

In Kaduna, one factory worker, Mr. Sani Musa said, "the Federal government is broke, it removed the fuel subsidy not quite long ago and now they are removing electricity subsidy from the power sector.

"Even in Kano State, the chamber of commerce out rightly condemned the increase in tariff, as industries cannot operate profitably under the new electricity tariff regime.

They join millions of Nigerians requesting the government to reverse that decision. Instead they ask the PHCN to work on providing adequate electricity to consumers before thinking of increasing tariff.

According to the PHCN staff, Nigeria is among the few countries in the world that pays less for light, which is why the increase came up.

And the gas that is used to generate electricity is bought from the Nigeria National Petroleum Company (NNPC). The gas and other materials are expensive and in short supply.

Another staff of the PHCN who simply gave his name as Dauda explained to this paper that of recent, monthly salaries of PHCN staff is about N7 billion and now with the new wage increase, the monthly salaries is about N11 billion, a far cry from the company's monthly generation which is about same amount. He therefore averred that the tariff is also aimed at improving the monthly revenue generation of the company.

Likewise, Mallam Gambo Slow said that he used to buy 100 units that last one and a half months, but now with the new increase, he bought 100 units and within a week when he checked, 20 units were already gone. He was not certain whether it would take him a month.

Most residential customers of PHCN interviewed still using the old metres are waiting for the June bill before they could start feeling the effect of the increase.

Similarly, Mohammed Lawal, also a staff of PHCN told LEADERSHIP WEEKEND that the Multi Yearly Tariff (MYTO) is already implemented since on the 1st June, 2012. He further explained that the consumers are categorised into two groups, the Maximum Demand (MD) customers normally referred to as the Maximum Demand customers such as industries, companies, institutions etc are highly consumers and would continue to pay higher due to their high demand for electricity.

While Non-Maximum Demand's (Non-MD) are residential building such as apartments, schools, Mosques, Churches, small-scale welding activities etc would pay their bills according to their consumption.

A visit by our correspondent to the office of PHCN at Ekpeyong street in Uyo further backed the argument as most PHCN customers, especially those using prepaid meters, said they had experienced a significant drop in the amount they spent on electricity monthly.

Electricity consumers in Akwa Ibom Lament Inadequate Supply of Power, Shortage of Pre-Paid Metres

Mrs. Blessing Urom a trader at Akpanandem market Uyo told our correspondent, since she has acquired the prepaid metre, electricity charges in her shop has reduced considerably, "Anybody that has used a prepaid metre will never wish to use old metres again." she said.

"Before we switched to prepaid metres, we never had control over anything. It is whatever PHCN gives us that we take, and we can't even ask questions. Even when we don't see power, we sometimes pay more.

"If you feel hurt and refuse to pay, the next thing you see are men with ladders.

They just cut the wire and walk away; and for them to reconnect you, you have to pay the bills they impose on you as well as a reconnection fee N2,000. The experience was a very bad one. It was very embarrassing."

But large number of electricity consumers in Akwa Ibom who could not access the prepaid metres have continued to protest the scarcity of prepaid meters and arbitrary billing by power distribution companies on monthly basis.

They say the astronomical monthly bills could have been checked if prepaid metres were made available to the consumers in the state, the problem of arbitrary billing is faced more by customers who use analogue metres. These groups feel their bills are not always commensurate with electricity consumed where they reside.

John Udoka a civil servant from Essien Udim local Government area of Akwa Ibom state lamented that he was sick of paying PHCN bills as they were only concerned about bringing bills without providing electricity.

He said he was not comfortable with estimated bills. "I have been complaining to PHCN to reduce its tariff because it is too much, even the light, we don't even see it. I don't have any other alternative but to keep on paying the bill.

Honestly I prefer the pre-paid meter so that I can buy the amount of energy I need every month. But they are not available. If you go to my area, you will see no light but every month I will be paying for something I never used, this is very unfair."

But, reacting to the issues raised, Uyo District Business Manager of PHCN Eng. Uzoma Mbuko said the supply of prepaid metres had not been suspended "but deployment has been slowed down."

However, he disclosed that, the installation of the pre-paid meter is on-going but not as expected. "We are still installing the pre-paid metre but not at the rate expected of us.

"I can confirm to you authoritatively that there is no official directive to stop the pre-paid meter. From the feedback I am getting from my department, it is something that people want and the management is trying to do everything possible to resume massive deployment of it", he said.

And for issues surrounding electricity including crazy bills, he said, "I believe the prepaid meter will solve that problem. I don't know why people keep saying that they are billed for what they didn't consume.

But, when the pre-paid metre is issued out to everybody there will be no talk of crazy bills."

Complaints In Makurdi Benue State

An aggrieved resident of Makurdi, the Benue state capital who expressed sadness and disappointment over the sharp increase in electricity billing was Mr. Levinus Yange, a community leader. He said that it was unfortunate for the level of difficulties faced by many persons particularly those who he said had retired from service and were family men, and were still looking after a lot of people and also responsible for payment of electricity bills.

According to Yange "I believe it was better when the tariff was not increased, there was steady power supply and residents were still charged very low to whatever amount of electricity they consumed. But now, they keep bringing bills amounting to big money and even when you pay, it is often unpredictable whether they would be light or not. I think the electricity regulating body should quickly look into the matter, not considering the status of some people but the overall interest and the welfare of the masses."

Mrs. Ashi Uza, an aged woman who, according to her, has owned two houses in Makurdi, the capital through her business of locally made millet toxic said the most devastating aspect of the development is that new electricity meters were now introduced for usage and that the price was relatively high. She added that the increase in the bills was not a good progress for petty traders and peasant farmers.

Ashi, who resides at Wurukum, one of the most busy areas in the capital city of Makurdi, stated that "increasing the bills as against what the people use to pay cannot not be too much problem except that PHCN always do what they called low shading.

Sometimes they call it rationing, they would give light in the opposite house where I live, for days or hours, and they will be no light in my house. It is very bad when our leaders who we have voted into office to find better ways of making life easier for the general people make life difficult."

However, some of the electricity consumers have blamed the high rate in tariff on federal and state governments, saying that government was only concerned of implementing policies without setting out palliative measures.

According to them, there was unemployment in the land and that neglect by government; corruption and general insecurity in the country were part of the many reasons why the development has caused pain to consumers of electricity.

For Oche Maleh, government was not living up to its responsibilities because the country was blessed with a lot of natural endowments but, according to him, the process of ensuring good management of them to further improve the lives of the general public, both the rich and poor, were however thwarted by selfish politicians whose concern, he said, was personal aggrandizement.

In the FCT, same story

At the PHCN Distribution Centre 3 in Kubwa FCT, it was a sad scene as consumers were seen shouting and exchanging words while the Company personnel looked on helplessly as they could not contain the angry and agitating consumers. According to Chika Eze who lives in Shelter Farm in Byazhin,

'I only have a small fridge, television and iron in my one- room apartment but I can't understand why one thousand naira recharge card should finish within a week, and now they say the card is not even available for me to buy,' Chika laments.

Temitope says she has been coming to the distribution centre for the past 4days to get recharge card but "they keep telling me different stories, either, there is no card or there is no light to activate it."

Mr Chuks who also lives in Byazhin said he raised an alarm on what he called the 'hidden charges' collected by the distribution companies officials that install metres.

"How can they just bring in this new idea without letting us know the implication?' Chuks asked. He told LEADERSHIP WEEKEND of a particular incident.

'I don't know whether these guys that are installing these metres are trained because somewhere here, one of them was electrocuted and he died. Again, in my house (of about 12 blocks of one-bedroom flats) they just came and installed the metres in one position and people couldn't even tell which one was theirs."

Another consumer, Mrs Adesina said, "We pay #12,500 to PHCN workers to install the metres in our house. For some, this issue of fixed charge, whether you have light or not is illogical, it's cheating. If MTN or other telecom companies are doing this (charging people whether they use their services or not, will it be fair?

Will government accept it? How can you tell someone when to use their recharge card or light? So if someone is not using light within a particular period, he has to lose his money? It's crazy! It's better these people come up plainly to tell us what they have in mind, we need to know and whatever idea they come up with must be optional, nobody should impose just anything on us."

In an interview with Abba A. Ibrahim, NERC Commissioner Government and Consumer Affairs, he told LEADERSHIP WEEKEND that all these complaints are issues the Commission has addressed and is still addressing.

"We have put in place a three- tier customer- company redress forum which should be able to handle any issue raised as regards the MYTO 2.

For example, we have trained personnel to take care of the consumers' complaints units (CCUs) which are fully operational in all the distribution companies to address all customer complaints, and where the CCUs fail, customers can now seek redress at the NERC forum offices which have representatives from several consumers groups and NGOs.

These structures have been put in place to ensure effective and efficient service delivery under the new tariff order' Mr Abba also said 'we have also advised the distribution companies to have town hall meetings to enlighten consumers in the grassroots in different areas.

Some of these problems are due to lack of proper information. Though there other problems like societal issues, personnel not knowing their responsibilities and constraint in the service delivery but we are doing everything possible to give the public the best they deserve.

I am just coming back from the consultative forum with distribution companies' on the billing estimation methodology. We know that there may be bad eggs within the distribution companies who may want to exploit people but we are watching and investigating. NERC is open for any complaints and enquiries."

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