There is apprehension in the country over the planned introduction of a new electricity tariff regime, which is expected to take off today.
With the initial denial by the Distribution Companies (Discos) and the continued silence of the Nigerian Electricity Regulatory Commission (NERC) on the issue, Nigerians are confused as to whether they would start paying more for electricity from today or not.
Meanwhile, the Manufacturers Association of Nigeria (MAN) had disclosed that the planned increase was communicated to them earlier in June, adding that they hadn’t received contrary information from the DisCos.
It could be recalled that the DisCos had jointly alerted their customers to a planned electricity tariff increase from today. Essentially, the NERC had years ago developed a mechanism called the Multi-Year Tariff Order (MYTO), under which the expected increase falls. MYTO provides a 15-year tariff path for the Nigerian electricity industry with limited minor reviews each year in the light of changes in a number of parameters such as inflation and gas prices and major reviews every five years, when all of the inputs are reviewed with stakeholders.
The DisCos, in statements sent to their consumers almost two weeks ago, and seen by The Guardian, hinged the planned increase on the MYTO, stating that the review was due to the fluctuation of the naira in comparison to the dollar in the exchange rate market.
Abuja Disco, for instance, told its customers that while some bands will have their tariffs increased to N100, others will have theirs raised higher.
“Effective July 1, 2023, please be informed that there will be an upward review of the electricity tariff influenced by the fluctuating exchange rate. Under the MYTO 2022 guidelines, the previously set exchange rate of N441/$1 may now be revised to approximately N750/$1, which will have an impact on the tariffs associated with your electricity consumption.
“For customers within band C, with supply hours ranging from 12 to 16 per day, the new base tariff is expected to be N100 per kWh while Bands A with 20 hours and above and B with 16 to 20 hours, will experience comparatively higher tariffs. For customers with a prepaid metre, we encourage you to consider purchasing bulk energy units before the end of this month, as this will allow you take advantage of the current rates and potentially make savings before the new tariffs come into effect.
For those on post-paid (estimated) billing, a significant increment is imminent in your monthly billing, starting from August,” the AEDC said
The Ikeja Disco (IEDC) and Eko Disco (EKDC) also sent similar messages to their customers. But AEDC turned around a few days after, appealing to its customers to disregard the planned tariff increase, as approval for such increment had not been received.
“Please disregard the circulating communication, regarding review of electricity tariffs. Be informed that no approval for such increments has been received. We regret any inconvenience,” AEDC said.
In the last three to four times that tariff had been increased in the country of late, NERC had done it quietly. Efforts to get a confirmation from the commission on what Nigerians should expect from today proved abortive as members of the commission that could speak for it, all kept sealed lips.
However, a source within the commission, who pleaded anonymity, told The Guardian yesterday that NERC had, in a fresh memo, asked the DisCos to allow the first week of July pass before a decision is taken. The source, however, refused to avail The Guardian the memo.
A source at the Manufacturing Association of Nigeria (MAN) headquarters in Abuja, who preferred to remain anonymous, told The Guardian that the DisCos were only trying to save face because of the outrage and that the increase would most likely still happen, but quietly this time. He added that it was strange to them that the NERC is silent as the DisCos are claiming that there is no increment in the offing as information communicated to them says otherwise.
“It is surprising to say the least that they are denying there is no increase in the offing. In a memo sent to us earlier in June on the review and codification of eligible customer regulations (ECR) and the guidelines on the competition transition charges (CTC), they said they were consulting us on proposed amendments to the ECR and the guidelines on CTC for the purpose of strengthening the implementation of the two regulatory instruments for improved service delivery and we are aware of what that means.
No other information has been communicated to us directly, so we take it that the increase is still going to happen but they don’t want to make noise about it. I can’t begin to describe how this would affect us going forward,” he said.
President, Nigeria Consumer Protection Network and Power Sector Perspectives Coordinator, Kunle Olubiyo, also said the tariff might be increased quietly again.
“It has been done quietly in the past. It is until people start noticing changes in the unit that we will realise that it has been increased,” he said.
Meanwhile, most consumers took to Twitter yesterday over vending-related challenges as consumers engaged in panic buying ahead of today.
An end-user, Idowu Tidy, said he had bought units through his bank but did not get his token. According to him, “please note that there is a delay in generating the token. Token will be sent shortly” was the message he got.
Akinlolu Olaniyan also expressed the same concern, noting that he sent emails and messages without getting a response.
“We need to call out Ikeja Electric on this vending issue. I feel it’s a scam to get many into the pool of recharging after the increment takes effect on July 1,” another consumer, who identified himself as Crown said.
In an attempt to improve revenue in the power sector and change the financial situation in the sector, the previous administration had approved a Service Based Tariff (SBT) approach where electricity tariff would increase twice a year.
The justification for the increase is to be based on increased power supply but the reverse is the case.
In the aspect of revenue, the distribution companies have been recording an increase in their books as they generated N681 billion from July 2022 to March 2023 but the state of electricity has remained the same or worse since the SBT came into effect.
Some stakeholders told yesterday said that the Federal Government and NERC may be delaying the implementation of the tariff increase to buy time and douse existing backlash on the development.
Coming weeks after the removal of fuel subsidy and the floating of the naira amidst rising inflation, Nigerians had cried out against the move .