Despite growing complaints and clamouring from Nigerians over the current electricity tariff hike, data available to BusinessDay indicates that only 25% of the population in service bands A to C will be impacted by the tariff review, (or 50% of the on grid population), while the Federal Government will continue to subsidize the electricity tariff for the remaining.
Analysis of the share of consumer band contribution to DisCo revenue indicate that service band A consumers will see the highest average increase of 48 percent across DisCos but these are maximum demand customers including industrial zones and highbrow estates and commercial areas where the rich and famous all reside.
Customers on band B and C will see their share of contribution to DisCo revenue increased by 25 percent and 27 percent respectively and the bulk of these customers fall in residential classes and are in major city centers in Lagos, Abuja, Port Harcourt where middle income Nigerians live.
Considering that about half of Nigeria’s 200million people do not even have access to the grid, and a huge chunk of electricity consumers fall under bands D and E who will see their tariff frozen, this means that in real time, barely 25 percent of Nigerians will pay a higher tariff for power under the new service reflective tariff (SRT) plan.
The new SRT took effect September 1. It is anchored on the principle of equity demanding that DisCos bill consumers based on the level of service delivered. The DisCos have always pushed for a tariff that is cost-reflective, now they must earn their pay.
Customers tell BusinessDay that the lack of proper communication by DisCos has troubled Nigerians and now the regulator has mandated DisCos to embark on an effec.
tive enlightenment programme expected to reduce confusion among Nigerians and the resulting irritation
This directive to the DisCos was issued through meetings that sources confirm happened on Thursday and Friday between NERC and the DISCOs.
DisCos were broadly consulted in developing the tariff plan and based on allowed recovery and its consumer split, each DISCO designed its tariff system applying the service-based methodology to earn a revenue not greater than its allowed recover,
DISCO submitted their proposed tariff design for NERC ratification and conducted consultation with its consumers on new rates and service commitment. NERC approved the tariff request from DisCos and issued a tariff order to this effect.
Therefore, DisCos have been mandated to improve communication and service commitments to consumers or face sanction.
Specifically, DisCos have been directed to publish rates and figures by location for all consumers so citizens can clearly understand where they stand, who has been impacted and who has not been impacted. DisCos have said they need time to ensure adequate communication given the tariff orders were only issued few days to September 1st.
Communication so far has largely been around rates per tariff band. Band A has 20 to 24 hours, Band B has 16 to 20 hours, Band C has 12 to 16 hours, with Band D and E being lower than 12 hours. Band D and E which are said to be less wealthy areas of the country are frozen for tariff increase. This is where most citizens fall but with spotty communication, this message is lost.
“Dear Customer, this is to notify you of the new Service Reflective Tariff which takes effect from September 1, 2020,” Ikeja Electric sent to one customer, directing him to visit a link for full details.
Following the link to the Ikeja Electric Website, shows a notification of the new tariff review, the various service bands and applicable tariff.
“I live in Palm groove, but I can’t understand from this information which band they have placed me. I can’t even determine which band I am in based on the hours of power supply I get a day, because regular power cuts makes it harder to determine service delivery,” said Akin Omotosho, a customer on the network.
Ikeja Electric informed customers wanted information to visit their website for more details or call customer service on dedicated lines. If they were not satisfied, ‘visit the website for further details,’ the message read.
Therefore, many consumers say they are not clear about where they stand on Service Guarantees by the DIsCOs. Many are unaware that if a DIsco consistently fails to meet service guarantees an area will be moved to a lower tariff band.
Furthermore, there is a deliberate exercise by NERC that is focused on making the DisCos own communication with consumers they serve rather than NERC. This has had mixed results given the confusion being experienced now by the public.
It has led to several people condemning the tariff increase when in reality they may not even be affected. Yet the current tarrif review still pales into insignificance when compared with what some very poor Nigerians living off-grid are paying for energy generated from solar or other renewable energy sources.
For example beneficiaries of the 85kw solar hybrid mini-grid at Gbamu-Gbamu village, in Ijebu-East Central Local Council of Ogun state having being paying over N100/per KwH for electricity for the past two years and those in more remote parts of Nigeria, without grid connection, pay even more.
Analysts agree that the tariff review will help the sector challenged by limited cash flow. “The new tariff plan to the extent that it is clear that customers may pay higher tariffs where service delivery is assured would be welcomed by investors,” said Dolapo Kukoyi, energy lawyer and partner at Detail Commercial Solicitors, a law-firm based in Lagos.
However, there is concern by the Federal Government about the ballooning population of citizens that are off grid. Data from the government show that over 80million people do not have access to the grid. Nigeria’s population is projected to double in the next 50 years indicating more people will need energy access.
The CBN loans to developers to provide solar solutions for 25 million poor Nigerians is said to be on fast track to ensure that as rates are being modified in urban areas the government attempts to improve electrification rates in rural areas.
The electrification progress has been slow as developers have struggled to get cheap loans from banks to cater to poorer rural consumers.
There is pressure within the Government for NERC and other agencies to fast track mass metering and enforcement of existing bans on arbitrary billing. What remains to be seen is if the execution of these electricity policies by the Government will match its rhetoric.
