Barely two months after government introduced the fuel subsidy removal policy which sparked off a protest which nearly set the entire country ablaze, the government last week announced a planned 88 per cent? hike of electricity tariff setting tongues wagging that the government may be hell-bent on finding out how far the people can continue to stomach unpopular government policies. CHIKA OTUCHIKERE and JULIET ALOHAN look into the issues.
Nigerians are already bemoaning their fate over some of the recent policies of the federal government. Most of them who have spoken about last week’s disclosure that the Federal Government was hiking electricity tariff by a whopping 88 per cent have concluded that the planned hike coming on the heels of the controversial subsidy removal programme, is one anti-people policy too many.
A foreign media reported that the federal government reportedly concluded plans to hike the tariff from April1, 2012. According to the report, a kilowatt which currently cost N10 would cost about N19.
The story further disclosed that the hike would precede the privatisation of the 18 power generation, distribution, and transmission companies billed for this year. The report quoted the federal government as saying that the hike in cost of electricity would translate to more profit for the prospective investors, serving as the incentive.
Although the federal government made allusions to providing some form of subsidy to cushion the effect on the poorest of the poor consumers of electricity, the announcement of the hike elicited the desired condemnation by the public who saw the plan as nothing short of insensitive.
An electricity consumer and social rights activist, Mr. Andrew Adeniyi, described the planned hike as another of government’s policy to further push Nigerians to the wall.
According to him, were the electricity supply available when Nigerians needed it, they would be willing to pay anything for the services. He noted that the government adopted the same approach during the fuel subsidy removal saga, a situation where the government increased fuel pump price with a promise to use the proceeds to provide the much needed social amenities.
“The government has been saying that they want to increase electricity tariff we don’t have any problem with that. The problem is that before now we have been paying for electricity that hardly gets to us. Now, if they are telling us that they want to increase the amount we have been paying for a non-available service, how do they want us to react?????
“The pronouncement of the government that electricity tariff would be hiked by a whopping 88 per cent may have set a precedent in the general understanding of buying and selling. In the lay man’s view a buyer pays for only the things he gets from the seller.
It is practically unheard of that a buyer continues to pay for something he does not get and yet is told that a hike of 88 per cent has been placed on the same product.?
Nigeria’s economy is in this ugly shape today simply because successive governments did not put any interest in providing electricity for Nigerians. They were only interested in ensuring that their associates and those that front for them make huge returns selling electric generator sets.
Today the world is leaving us behind because generator sets have been phased out in most developed countries and replaced with uninterrupted power supply from varios stations including the gas and hydro stations among others.
Now the same government wants to do the right thing but wants to force the poor Nigerians who were all these years, deprived of electricity, to pay money so that investors who were the same people that benefitted from the generator boom days can be attracted to put in their money.
This is the only country where such thing happens and everyone will just fold his arms as if it does not concern them. This government must exhibit some feelings for the people. The poor must not be made to suffer for the sins of the rich”, he said.??
The chairman of the Nigeria Electricity Regulatory Commission (NERC), responsible for creating sanity in the sector, Dr. Sam Amadi, explained in an interview with LEADERSHIP SUNDAY that the increase in tariff would not cut across board as customers are now classified into 14 classes which includes the R1 R2 R3 R4, the special customers, hospitals, street lightning, general service customer, and bulk metering, based on their energy consumption level, the type of metering and cost of service.
According to him, with the new tariff regime, customers in the various categories would witness between 25 and 88 per cent increase in their electricity tariff.
Amadi further explained; “the tariff will now depend on each Distribution Company (Disco). What you pay in Yola may be different from what you pay in Lagos, because there are slight variations in the cost of customer service to the different categories of people”.
He said: “We are not looking at average tariff. Part of past problems was to look at average tariff. It doesn’t tell you exactly what a customer in Yola or Lagos will pay. We can only have a general percentage increase maybe by 100 or 150 per cent.
So, if someone who was paying N2.00 now pays N2.50, if you look at it in percentage it is significant but in naira equivalent it is not very significant”.
He said the least class of customers are the R1 customers comprising of people in rural areas or people living in one room flat who usually have low energy consumption.
“But when people upgrade and consume more power, their consumption level will spike and the Disco will automatically migrate the customer to R2 or R3. Before now customers residing in residential areas are classified as residential customers and those in industrial area are classified as industrial customers but with proper metering now, you can reside anywhere and be properly metered”, he said.
He noted that the power consumer fund would go a long way in reducing the tariff payable by lower class customers. The fund LEADERSHIP SUNDAY learnt would comprise of contribution from higher class customers which he said would be used to subsidise lower class customers.
The power sector reform Act, he explained, provides that; “the minister, working with NERC, establishes the customer class that will benefit from this fund and which class of customer will subsidise them, then the Discos will contribute for the difference between those classes which will now be used to cover the component of the tariff for that customer class”.
While assuring that the fund would be run in a transparent and efficient manner that will not distort the market, Amadi explained that the idea behind the fund is to have a sense of what each Disco will pay into it at the end of the month from the various consumer classes.
“For example, if we say that commercial consumer C3 should subsidise R1 consumer class, now every disco knows the number of R1 customers they have, so every month they know what group is subsidising what and the contributions are transferred to the fund and used to subsidise the groups”, he said.
“More so, the fund would be made up of other subsidies that may come into the industry that have not been presently assessed. What this means is that at the end of the month your bill can read N300, indicating that power consumer assistance fund is N200 leaving you to pay N100,” he added.
In the view of some stakeholders who attempted to interpret the NERC chairman’s statements, the implication is that government is now claiming that it has introduced subsidy into electricity tariff.
The tariff, they averred, may turn out tomorrow to cause disaffection when any government attempts to remove it. Moreover they aver that the government should have assured the people of stable electricity supply before coming to them with any form of tariff hike.
A senior citizen and retired civil servant Chief Nnadozie Alozie, criticised the action saying that it would further impoverish the people. According to him, the decision was not well thought out.
“Only recently the power minister Prof. Barth Nnaji came out and announced that the country’s megawatt has increased to an unprecedented 6,000-plus. It is however instructive to note that since I read that statement in a newspaper report, I have been finding it very difficult to reconcile.
I can tell you that the kind of power failure or total blackout I have experienced these last few weeks is worse than any we have experienced in the past. This makes me wonder whether the minister is not just saying it to hoodwink us. The reason is that if the megawatts increase, then the people will experience more stable supply of power. But the reverse this time is the case.
“I doubt very much whether this arrangement to sell off the power system to investors would yield the desired result. I say this because the Nigerian factor will always play out.
They will give the contracts to those people they know and want to please. Whether they know what to do or not is not important to our leaders. We cannot tell government not to increase the tariff but they must also make sure that the electricity is available, that is the only way we can trust our leaders”, he said.
Others who spoke indicted the government for its lack of proper insight into ending the perennial and embarrassing power failure. They pointed out that the problem with the electricity problem is not that the PHCN was not making enough profit to run the establishment and even fund itself. The problem they averred is that the money as with so many sources of revenue does not go into government coffers.
Shehu Ibrahim, a consumer and owner of a hair making outfit in Wuse noted that the government was not interested in how much money comes in through the present tariff.
All they are interested in, he said was for them to provide money annually through the budget. Nobody has ever accounted for the monies that have been coming in all these years when they were not giving us light but forcing people every month to pay their bill.
I am a graduate of economics but I find more pleasure in self employment that is why I set up this salon. I must tell you that if there is anything that gives me a second thought about going to look for job elsewhere it is the problem of power supply. You’ll agree with me that without regular power supply there is just nothing you can do. The business becomes one hell of a frustrating venture.
From my personal observation I can tell you that the PHCN officials are part of the problem of power supply. They are only interested in making money for themselves than doing the government work for which they were employed.
If you see the rush at which they come and connect or reconnect people when they know that there is money in it for them will tell you that they are simply interested in themselves and not this country.
The government must first address this or they will find that these same PHCN staff will sabotage the efforts of the investors coming on board. The government must save the country from this national embarrassment”, he said.?