Besides, it is insensitive on the part of the government to allow a 200 per cent increase in the price of power that is virtually non-available; and at a time when Nigerians are reeling from the aftermath of the removal of the fuel subsidy without concrete intervention to placate its effects. The government needs to revisit the electricity subsidy removal if it genuinely wants to stabilise and improve the economy, as the tariff increase can only compound the unease of doing business and worsen inflation in the country.
The campaign for the right billing regime and more liquidity for the DisCos are all too familiar. However, the gross opacity, daylight robbery, insensitivity, and underlying lack of empathy for the Nigerian public are shocking. Whatever the so-called electricity subsidy removal and the current power apartheid aim to achieve is in bad taste.
The power sector has always been roiled in all manner of shenanigans. The sector was privatised in 2014 leading to the proliferation of Distribution Companies that largely do not have the right capital and technical capacity to invest and swing the fortunes of a country in perpetual darkness.
And that explains the anomaly of power generation (and its export to neighbouring countries) of over 10,000 megawatts, but an average of 3,000MW in use in Nigeria amid yawning needs and indebtedness of the DisCos. With that gross inefficiency come unmet revenue targets amid depreciating infrastructure. And that is the genesis of electricity subsidy of over N5.4 trillion in 10 years by the Federal Government, albeit for offering darkness in commercial quantity to Nigerians.
With the parlous argument that the hitherto existing tariff is unsustainable, and akin to the abrupt petrol subsidy removal, the Nigerian Electricity Regulatory Commission (NERC) recently reactivated the power subsidy removal plan of 2023, by abruptly increasing the electricity tariff of a newly computed band, involving about two million households, representing 15 per cent of the 13 million electricity customers in Nigeria. On that Band A ‘elite’ group, estimated to have access to a 20-hour electricity supply daily, each customer will pay an average of N225 kilowatt per hour (KhW) from an average of N70. Technically, a new tariff regime of about 240 per cent increase has commenced, though beginning with the Band A group.
Tellingly, the cost of operation has peaked across the board, inclusive of the electricity supply value chain. NERC, through an April 2024 Supplementary Order, based its decision on rising gas prices, inflation, and foreign exchange rates. Recently, the Nigerian Midstream Downstream Regulatory Authority (NMDPRA) adjusted the price of natural gas for the power sector from $2.18 to $2.42 with an additional $0.5. Between January and now when NERC announced a now abandoned Multi-Year Tariff Order (MYTO), inflation has slightly increased while the exchange rate moved from about N1000/$ to over N1,300/$.
Nevertheless, the problem of power supply borders more on gross inefficiency, endemic opacity, and taking the Nigerian public for granted. Amid the confusion of polarising the intensity of darkness according to Bands and separating the haves and the have-nots in the process, Nigerians nationwide saw a chain reaction among the DisCos, enforcing the new rate even on those that are on Band-zero of no electricity supply at all. The DisCos wanted to cash in on the new era of freebies from merchandising blackouts and calling it electricity. Abuja Electricity Distribution Company (AEDC) had to issue a statement apologising for wrongly charging customers. Almost everyone could see through the daylight robbery scheme of reaping without sowing.
The regulatory commission (NERC) created a tariff bank spanning from A to E. The major difference across the tariff is the hours of supply. Those under Band A allegedly enjoy electricity for at least 20 hours per day. But, in what part of the country, industries or residentials is that subsisting today, and coming from NERC and DisCos that do not have control over frequent grid collapse? Now, downgrading almost 50 per cent of the Band A customers meant that DisCos had for over two years deceived the commission and must have wrongly charged consumers for hours of electricity they never enjoyed.
Again, how come Nigeria has about 13.2 million registered electricity customers, and only 5.8 million have been metered even when metering remained a key performance indicator for distribution companies? For over 10 years, about 8 million customers have been billed arbitrarily, a development which usually shortchanged not only consumers but worsened the liquidity crisis in the power sector. This has necessitated over N5.4 trillion tariff shortfall and pushed indebtedness of the power sector to the Central Bank of Nigeria (CBN) and commercial banks to record high.
More so, the new billing regime is coming as one of the highest single tariff increases in the history of electricity rate adjustment in the world, and it smirks of gross insensitivity on the part of the current administration whose policies have left the people reeling. For all modern economies, which Nigeria aspires to be, power is a critical factor for economic productivity, both in industries and households. Public supply and its affordability are akin to fundamental economic rights guaranteed by all serious governments. And nowhere in modern times do tariffs leap by 200 per cent points in one day.
In Nigeria, while public power is routinely unavailable and neither the generating nor the distributing companies are held accountable for incompetence, the next most popular alternative has often been petrol – more for household consumption than for transportation. With fuel subsidy abruptly gone and without any sustainable plan to ameliorate its pains, even what is left of the public power is being tinkered for upward adjustment without appreciable improvement in supply. The cataclysmic effects will be on already distressed industries and homes, with the attendant spike in inflation with the cost of food items and goods soaring above the roof. A modern government cannot be more wrongheaded and fiendish.
But for how long would the Bola Tinubu administration continue to pass the burden of systemic inefficiency, lack of deep thinking and pragmatic solutions to the beleaguered masses? Petrol and electricity subsidies are unbearable to the government, why pass in piecemeal the cost of darkness to the people, when the actual problem is the complicity, wastage, and inefficiency of government cronies turned players in the power sector? What exactly are Nigerians getting as a dividend of democracy or the so-called ‘change’ of the All Progressives Congress occupied by the overtly subsidised political class, if not untold pains and hopelessness?
Until the DisCos and others in the power supply chain deliver on their mandate, and the government statutorily holds them accountable for the efficiency and transparent implementation of the billing process, upward review in the cost of darkness should be an aberration and a no-no.
NwokeAgulu
