... But darkness to continue after 2027 polls
By AYOOLA OLAOLUWA
Nigeria faces another electricity tariff hike, but for the upcoming 2027 elections. Informed sources said that government has already given approval for tariff increase, but is waiting for the election for fear of voter backlash.
“The only thing stopping a price increase is the 2027 polls. I believe the government is delaying it so that it will not cause disaffection and possible votes loss in coming elections.
“But I can assure you that it (price hike) is inevitable. Nigerians should brace up for another subsidy withdrawal. If it does not happen now, it will definitely happen after the 2027 general elections”, said one of the sources who begged for anonymity.
Nigerians are paying significantly more for electricity, but receiving little in return, as persistent outages and erratic power supply continue to undermine recent tariff increases, Business Hallmark findings have revealed.
Two years after the last tariffs adjustment in April 2024 aimed at generating funds to stabilise the struggling power sector, households and businesses across the country, who spoke to our correspondent on the situation, lamented that they are still grappling with constant blackouts, voltage fluctuations and mounting energy costs.
The affected power consumers called on the government to urgently address the decay in the sector and halt the imminent slide into darkness.
It would be recalled that the industry regulator, the Nigerian Electricity Regulatory Commission (NERC), had in the spate of eight years (2016 to 2024), approved six price reviews.
The first review within the 8-year window happened on February 1, 2016, when NERC increased the Multi Year Tariff Order (MYTO) by over 50 per cent.
It was followed by another increase in July 2020, while the third increment kicked off from November 1, 2020, but later suspended after severe outrages.
The commission will later went ahead to amend the suspended increase with discounts and reintroduced it on November 1, 2020, which made it the fifth tariff hike since 2016.
In January 2021, the fourth increase of about 25% on average varying across the discos was effected.
Also, NERC announced the commencement of a Service Based Tariff (SBT) effective September 1, 2021. The new tariff structure pushed up the price of a kilowatt to between N42.44 and N58.94
Service Based Tariff
In February 2024, the Federal Government approved its most controversial tariff increase ever, when NERC authorised discos to increase electricity tariff for Band A consumers by 300% starting April 2024 in a move to ensure sustainable energy distribution. The review excluded other customers under the Band B to E-service categories.
As a result, the 11 discos operating in the country raised electricity prices for urban consumers (Band A users) to N225 per kilowatt-hour from N68.
The rate increase, the regulatory body said, affected only 15% of the country’s electricity customers, who purportedly consume 40% of the nation’s electricity.
Bouyed by NERC’s mandatory investment targets and migration of more customers to the Band A service category, power distribution firms soon embarked on a massive migration drive.
According to BH findings, many poor and average Nigerians, who live and operate within industrial clusters with a minimum of 20 hours/day electricity supply, measured over one week, were affected by the review.
The tariff increase, NERC had explained, would help reduce electricity subsidies by about N1.2trillion.
According to available data, while tariff hikes in the form of higher revenues have helped distribution companies record higher incomes, supply constraints tied to generation shortfalls, gas supply issues, and weak transmission infrastructure has continued to choke the system.
As a result, millions of Nigerians are now facing a harsh reality: higher bills, deeper reliance on alternative power sources, and an enduring cycle of costly darkness.
Many electricity consumers, who spoke to BH on the matter, said instead of solving the problem it was meant to solve, the reclassification of energy users into bands have worsened it.
According to the affected users, they are being forced to pay for the inadequacies in the power sector.
A Lagos-based businessman, Mr. Henry Oladele, claimed the constant tariff hikes implemented to improve liquidity and attract investments into the nation’s struggling electricity market have failed to deliver improved service quality.
“Instead, we electricity consumers are facing a widening gap between what we pay and the electricity we actually receive.
“Before now, I used to get about 147.5 units of energy for every N10,000 purchase. Energy supplied immediately crashed to 44.4 units after the increase. I got a small reprieve with my N10,000 purchase now fetching me 48.8 units when prices was reviewed downward by government after a protest by Nigerians.
“To worsen the situation, electricity supply has drastically reduced. We hardly get 10-hour electricity in my area now, yet, we are forced to pay a premium for service not delivered.
“This raises efficiency, accountability concerns on the part of power operators, as well as the effectiveness of governments’ constant reforms in the electricity sector”, Oladele stated.
Another electricity customer, Mr. Uche Boniface, decried the gap between the promised 20+ hours supply and actual delivery.
Valued For Money
According to Boniface, electricity customers are not getting value for money paid.
“When you compare discos’ poor performances versus incessant tariff hikes, you will easily come to the conclusion that Nigerians are been reaped off.
“I now get less than 5 units for a purchase of N1,000? For someone like me that consume an average of 100 units a month, that means I’ll be needing at least N20,500 worth of energy to power my home monthly and N246,000 yearly.
“To circumvent the problem, I got an interest free loan of N2.5 million from my employer, which I used to install a solar system that can effectively power the whole of my apartment.
“The system has a guaranteed performance life-span of 25 years. Meanwhile, if I continue to deploy the amount I used to spend on buying electricity token from Ikeja Electric, I will clear the loan in just 10 years.
“If I add the about N650,000 yearly expenditure on diesel purchases and generator maintenance, I will fully repay the loan in two years and eight months”, the businessman explained.
The situation is not peculiar to only Boniface and Oladele, but to millions of Nigerian power consumers who daily grapple with poor electricity supply amidst constant tariff hikes by electricity providers.
Meanwhile, already burdened power consumers may soon be forced to pay more for energy supplied by discos as the Federal Government is considering raising tariffs yet again as a result of pressure from electricity generating companies (gencos), BH has learnt.
Electricity generation companies under the aegis of Association of Power Generation Companies recently upped their complaints against regulatory delays in adjusting tariffs to accommodate rising costs.
Call For Review
Speaking recently with our correspondent in Lagos, the Chief Executive Officer of the association, Joy Ogaji, called on NERC to urgently review electricity tariffs following the Federal Government’s recent increase in the domestic base price of gas.
The body warned that further delays could worsen liquidity challenges and distortions across the power sector.
“Gas price, whether it is raised to $10, is not really our problem. Gas is a feedstock and a pass-through cost.
“So if the regulator in the power sector is comfortable with the increase, it is not a problem for us because whatever we are charged, we pass it down to consumers.
“All we want is for NERC to acknowledge the new base price and input it into tariff calculations. There is now a clear difference between what we used to pay and the new price, and that gap must be recognised”, Ogaji had demanded.
Reliable sources in the Federal Ministry of Power informed our correspondent that the government is fully disposed to another electricity price hike and would have gone ahead to sanction it, but for the possible political fallout.
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