DISCOs Call On FG To Avert Electricity Tariff Increase

Electricity, BEDCElectricity distribution companies in Nigeria have called on the federal government to intervene in the power sector in order to avert an increase of over 200% in electricity tariff.

According to the operators, the intervention which is needed to address over 800 billion Naira revenue shortfall can come like subsidies to consumers or provision of special access to foreign exchange for the operating companies.

The average energy rate across the country is 22 Naira 8 kobo per kilowatt, but distributors say this may increase to between 70 Naira and 105 Naira per kilowatt if the revenue shortfall persists.

The Chief Executive Officer of the Association of Nigerian Electricity Distributors, Azu Obiaya, reportedly said the debts owed to power distribution companies by private electricity consumers, businesses and government authorities have climbed to about N568 billion.

He added that those debts are affecting the operations of the distribution companies and many are no longer able meet targets and service consumers.

Reports say a proposal for the increment of electricity tariff has been sent to the Nigerian Electricity Regulatory Commission.

An electricity tariff approved by the NERC took effect in February, 2016.

The commission also removed fixed electricity charges ordering that Discos should only bill consumers for what they consume.

NERC said “although, the new tariff regimes comes with an increase in energy charges, all electricity consumers (residential as well as commercial) will no longer pay fixed charges, so their total bills will depend on the electricity they actually consume and may be reduced when they conserve electricity.”

Electricity Tariff: NERC Has Not Lived Up To Expectation – Expert

David AderibigbeA Power Expert has faulted the Nigerian Electricity Regulatory Commission (NERC) and the Distribution Companies (DISCOs) over increments in the electricity tariff.

Mr David Aderibigbe was speaking on Channels Television’s Sunrise Daily on Wednesday.

“There are conditions and variables that must be affected in the economy before you can have a minor or major increment in the electricity tariff.

“The minor review involves: exchange rate, variability inflation, gas pricing and perhaps, the cost of generation and transmission,” he said.

The Professor of Mechanical Engineering suggested that the DISCOs should have rated the increase in a particular direction.

“I think there is nothing much to do other than working on the rate of increase which must be in a particular direction. What would be the government’s policy so that the consumers will benefit from it?, what would be the government’s policy with regards to the responsibility of the operators and what should be the responsibility of the consumers?,” he asked.

Fixed Charge Component of Electricity Tariff
Fixed Charge Component of Electricity Tariff

Speaking further on if due process was followed before the increment of the electricity tariff, the Power Expert said that “the issue of due process is more of consultation.

“The increment has been established by the law since the prorogation of the ESPRA act in 2005. The ESPRA act boarders on the multi-year tariff order that  regulates the pricing in the electricity tariff.

“It was put in place to ensure that the investors or the DISCOs were able to make back their investment.

“The basis was that there couldn’t have been a step change from cost reflective tariff that we were trying to move to at that time,” he explained.

Electricity Tariff: Court Warns FG, DISCOs Not To Disobey Subsisting Orders

CourtThe Federal High Court sitting in Lagos has warned the Federal Government and the Distribution Companies (DISCOs) not to disobey subsisting court orders on electricity tariff.

The court also warned the government not to act in a way that showed disdain for the court in a constitutional democracy.

Presiding Justice, Mohammed Idris,  gave the warning while ruling in a suit filed by a lawyer and rights activist, Toluwani Adebiyi, over the recent hike in electricity tariff on Monday.

Justice Idris fixed Friday, February 19 to hear an application by the Nigerian Electricity Regulatory Commission (NERC) seeking a stay of proceedings in the suit.

The judge fixed the date after listening to the arguments of lawyers representing parties in the matter over the order in which pending applications should be taken by the court.

Mr Adebiyi filed a suit seeking a perpetual injunction restraining NERC from implementing any upward review of electricity tariff without significant improvement in power supply for at least 18 hours a day in May 2015.

He also wants an order restraining NERC from foisting compulsory service charges on pre-paid meters until “the meters were designed to read charges per second of consumption and not a flat rate of service not rendered or power not used.”

Multiple Long-term Financing Approach

Mr Adebiyi wants the service charge on pre-paid meters not to be enforced until there is visible efficient and reliable power supply like those of foreign countries where the idea of service charge was borrowed.

He further asked for an order of court mandating the NERC to do the needful and generate more power to meet the electricity use of Nigerians, emphasising that the needful should include and not limited to a multiple long-term financing approach, sourced from the banks, capital market, insurance and other sectors of finance to power the sector.

Throat-cutting Bill

The lawyer also asked the court to mandate the NERC to make available to all Nigerians within a reasonable time of maximum of two years, prepaid meters as a way to stop the throat-cutting indiscriminate estimated bill which must be devoid of the arbitrary service charge, but only chargeable on power consumed.

In an affidavit in support of the suit personally deposed to by the applicant, the lawyer lamented that despite the motto and mission of NERC which were expressly stated as “keeping the lights on and to meet the needs of Nigeria for safe, adequate, reliable and affordable electricity,” most communities in Nigeria do not get more than 30 minutes of electricity supply, while the remaining 23 hours and 30 minutes were always without light and in total darkness.

“Nigeria’s poor masses are paying an estimated and indiscriminate residential bill ranging from 5, 000 Naira to 18, 000 Naira, spending an average of 15, 000 Naira to 20, 000 Naira for fuel to maintain generating set.

“Businesses had collapsed, industries had closed down, and residents cannot sleep comfortably at night due to inefficiency of our power industry.

“Companies and commercial houses are groaning under throat-cutting power bill which they are paying for, yet not getting the benefit for such payment,” Adebiyi stated.

Poor Power Supply

He stressed that the proposed increase in electricity tariff came amidst the tangled web of poor power supply with no reasonable proof of improvement.

“The situation is self evident, it readily speaks for itself because everyone is suffering from poor power outrage.

“Bringing further increase amidst this tangled web of hardship and without any improvement in power supply will be highly unjustifiable and will be an economic burden on Nigeria populace. It is totally absurd and not for the good of the people and therefore must be stopped,” Adebiyi submitted.

Justice Idris had made an order directing parties to maintain status quo and for NERC to suspend all actions relating to any increment in electricity tariff pending the hearing and final determination of the suit.

But while the suit was pending, NERC in conjunction with the Electricity Distribution Companies commenced the implementation of the new electricity tariff on February 1.

Protests by labour unions had since trailed the new power tariff.

At the proceedings, the plaintiff drew the court’s attention to an application seeking to commit the NERC’s Chairman and the CEOs of the Distribution Companies (Discos) to prison for allegedly flouting the order.

But NERC’s lawyer, Chief Anthony Idigbe (SAN), said he had filed an appeal against the order by Justice Idris.

He also said he had a pending application for a stay of the proceedings pending the determination of the appeal.

Mr Idigbe mentioned that the plaintiff had not effected service of the contempt proceedings on the alleged contemnors.

The two lawyers were divided on which application should be heard first.

Mr Adebiyi said the contempt charge should be heard first since NERC had undermined the court’s authority, but Mr Idigbe said the application for stay of proceedings should take precedence since an appeal had been lodged.

In a short ruling on the issue, Justice Idris, held that it was in the interest of justice to first hear the defendant’s application for a stay of proceedings pending the determination of their appeal against the court’s order.

The plaintiff then asked for a short adjournment to enable him file his response to the application.

Justice Idris subsequently adjourned till Friday for the hearing of the application for a stay of proceedings.

DISCOs Disregarded The Law By Increasing Tariff – Expert

Yemi Oke on DISCOsA Nigerian Energy Consultant has expressed displeasure with the increase in electricity tariff by the Distribution Companies (DISCOs).

Speaking on Channels Television’s Sunrise Daily on Tuesday, Dr. Yemi Oke likened the increment in electricity tariff to advanced fee fraud.

“I identify with the masses because their agitations are genuine.

“But what I don’t understand about the DISCOs is that, what is the position of the increment under the law?.

“The law says you meter before increasing tariff, but they haven’t done the metering,” he said.

Insufficient Megawatt

The energy consultant further noted that there were three institutions under the power sector reforms 2005 – the NRC, Rural Identification Fund/ Agency and Power Consumers’ Assistance Fund (PCAF).

“The PCAF should be factored in, at any time there is an increase or adjustment in tariff.

“Nobody is talking about that. The fund hasn’t been set up. It is under part eight of the law from section 83-87.

“The DISCOs must make extensive consultation with the stakeholders, different categories of consumers before increasing the tariff,” he emphasised.

Dr. Oke, however, supported the mild nationwide protest carried out by the Nigerian Labour Congress (NLC) on Monday, saying that “labour is fighting because of the tariff, but there are different categories of consumers. It is not the intention of labour to fight for the commercial consumers (companies), but those who consume a bit of the megawatt”.

Providing solutions to the hike in electricity tariff, Dr. Oke said that “there is needless competition and tension for the insufficient megawatt that is being generated and distributed from the DISCOs.

“We need to focus on increasing the production, focus on centralised governance structure that makes the NRC the only company that regulates and gives license and labour should also engage the stakeholders as to what is provided in the law”.

Ministry Says 2.7 Trillion Naira Spent On Power Since 1999

Nigerian power sectorThe Permanent Secretary of the Ministry of Power, Ambassador Godknows Igali, says about 2.7 trillion Naira has been spent on the power sector from 1999 till date.

The official gave the figure on Tuesday during the investigative hearing of the Senate Ad-hoc Committee on Power.

He said inconsistent funding was responsible for the lack of constant electricity in the oil-rich nation.

Ambassador Igali, however,  pointed out that the privatisation exercise, which took place in 2013,  had helped in taking the burden of funding off the Federal Government.

The Senate committee also received a presentation on the National Integrated Power Project, which was conceived in 2004, as a major fast-track initiative to add significant new generation capacity to Nigeria’s electricity supply industry.

Meanwhile, the Consumer Protection Council had commenced investigations into high electricity cost by distribution companies.

The Senate had said that the probe would cover the regimes of former Presidents Olusegun Obasanjo, late Umaru Yar’adua and Goodluck Jonathan.

The Senate Ad- hoc Committee on Power, was inaugurated by the Senate President, Dr. Bukola Saraki, on August 28.

The Clerk of the Committee on Power, Mr Cletus Ojabo, said the probe would be in form of investigative hearing and interactive session with key players in the sector.

Technical And Economic Regulation Of Nigeria’s Power Sector

NERC Sam AmadiWith the ongoing reforms in Nigeria’s power sector, particularly the privatisation of generation and distribution companies, there are expectations of a truly liberalized market in which consumers will mostly pay for services that they enjoy, while service providers will strive for quality operations.

The Nigerian Electricity Regulatory Commission, NERC, was set up to undertake technical and economic regulation of this industry.

The commission is to license operators, determine operating codes and standards, establish customer rights and obligations and set tariffs.

NERC Chairman, Dr. Sam Amadi, is our guest on this edition of ‘View From The Top’.

Governors reject privatization of electricity distribution companies

The Governors of Edo, Delta, Ekiti and Ondo on Thursday rejected the announcement of Vigeo Power Distribution as the successful bidder for the Benin Distribution Company by the Bureau of Public Enterprises (BPE).

The states are investors in the Southern Electricity Distribution Company which lost out in the bidding process.

The Chairman of the Technical Committee, National Council on Privatisation (NCP), Atedo Peterside, had on Tuesday during the opening of the commercial bids of the privatization of Power Holding Company of Nigeria, announced Vigeo as the successful bidder claiming the committee adopted Aggregate Technical Commercial and Collection loss Reduction as the basis for choosing the preferred bidder for the Benin Distribution Company.

In a press briefing after the announcement, Governors Adams Oshiomhole of Edo State, Emmanuel Uduaghan of Delta State and Kayode Fayemi of Ekiti State, told journalists that the process that led to the emergence of Vigeo Consortium lacks transparency.

It accused NCP of not judging by necessary parameters which include; technical competence, state participation, on the ground knowledge and financial competence.

The governors said:  “States were allowed to participate in the privatization exercise after exhaustive deliberations and consequent recognition of the value that the states were uniquely positioned to add to the success of the post privatization utilities mostly in the troubled areas particularly, the Niger Delta Region. Some of these include Right of Way, rural electrification, legislation against theft and vandalism, policing to improve collection.

“Our states have invested heavily in power generation, transmission and distribution across the length and breadth of our respective states as we recognized the importance of power as the pre-condition for socio-economic growth and industrialization of our states.

“We participated and came out as the most technically competent and have the consortium that is most suited to the peculiarities of our region.’’

“In our region, you cannot succeed in operating the utility without the participation of the state governments, on ground knowledge and relationship with different stakeholders such as youths, communities, leadership. Our consortium possesses all theses. Experts have said that Aggregate Technical Commercial and Collection losses as the singular basis for selecting the preferred bidder after qualifying technically was completely flawed. It is neither here nor there. It is simply arithmetic progression or statement which does not in any way demonstrate your ability to succeed post privatization.

On the question of whether the governors were considering litigation to restrain the BPE and the successful bidder, Governor Adams Oshiomhole responded that the company would not be allowed to operate in the states.

He added that “The technical qualification criteria also failed to take into consideration the peculiarities of the various discos, otherwise why would a company whose current service territory is 500 square kilometre be technically qualified to operate a 57,000 kilometre service territory in an area like the Niger Delta region without any local knowledge of this trouble area?

“BPE just allocated to companies that have big figures, you don’t reduce power to patronage, something you give to the boys, who are connected. It is a big shame. The whole process was riddled with corruption. The winner isn’t welcomed into our states; we will not allow it to operate in our state. He may be the one to go to court.