19 September 2017

Nigeria: Manufacturers, Others Reject Monthly Electricity Tariff Review

Electricity consumer groups have rejected the proposed monthly or quarterly minor review of tariff by the Nigerian Electricity Regulatory Commission (NERC), saying it should remain semi-annual as it was since 2012, or be made annual.

The various groups and individuals spoke at the stakeholders' consultation of the NERC in Abuja yesterday.

The Daily Trust reports that the Multi Year Tariff Order (MYTO) 2015 was signed in December 2015 but implemented in February 2016. Although NERC said some minor reviews holding every six months have been done, none however has been implemented for the last 21 months.

The Vice Chairman of NERC, Engr. Sanusi Garba, in his address said the consultation was to help change the frequency of tariff review. He noted that it was not about increasing the current tariff but to check the various indices and proffer a better period for the review and implementation.

NERC in a presentation at the consultation said the MYTO was adopted in 2007 and was amended in 2012 when its review was changed from annual to the semi-annual review process.

NERC said since implementing MYTO 2015, there has been rise in foreign exchange (forex) from N198 to over N300, resulting in the electricity market shortfall. It also said power generation dropped due to gas constraints and to vandalism from the projected 3220 gigawatts (gw) to about 1,500gw.

For the macroeconomic indices, NERC said the previous tariff was computed based on 8.05 per cent inflation rate but which went up to about 18 per cent.

However, stakeholders, especially the consumers, opted for an annual review or the present semi-annual mode.

The Manufacturers Association of Nigeria (MAN) said the monthly or quarterly implementation of the tariff will be detrimental to the manufacturing sector.

Chairman of the Nigeria Electricity Consumers Advocacy Network (NECAN), Chief Tomi Akingbogun, also said any increase in the tariff review will greatly affect electricity consumers.

Akingbogun said the last review raised tariff by over 95 per cent. He urged the Federal Government to protect consumers' interest by prevailing on the Distribution Companies (DisCos) to do customer enumeration and adequately meter them before any tariff review.

President of the Hotel Owners Forum (HOFA) Abuja, Chief Eze Ude, said the rates for hotels and other sectors are not reviewed monthly and that electricity is not an exception. "It will not be fair to the end users to raise tariff either monthly or quarterly," he said.

Some of the DisCos, including Eko and Ibadan, supported the monthly review saying their energy invoices are paid monthly and that tariff must reflect the changes from the Generation Companies (GenCos).

Representing the DisCos, Mr Adetunji Aeyeye of the Association of Nigeria Electricity Distributors (ANED) said it was global practice to review tariff monthly but that NERC could devise means of implementing it quarterly or annually, noting that the result of the review should not reflect in the DisCos' monthly energy invoices from the GenCos until it is implemented.

For the GenCos, Joy Ogaji of the Association of Power Generating Companies (APGC) said NERC should factor into the MYTO review about 2,000 megawatts (mw) stranded power generation whose cost has been borne by the GenCos.

On the tariff implementation after a review, former Managing Director of the Nigeria Bulk Electricity Trading Plc (NBET) now with ZKJ Energy Partner, Mr Rumundaka Wonodi, said tariff should be reviewed monthly but implemented quarterly.

Responding NERC's Commissioner for Engineering, Performance and Monitoring (EPM), Prof. Frank Okafor, said there was no immediate plan to raise tariff. "For the sake of record, computations are done and may not be implemented maybe on annual basis. We must do things the way they should be done to give investors confidence.

"These are interesting contributions and NERC will consider them before any decision is taken," he noted.

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