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Planned hike in electricity tariffs takes effect first quarter of 2021, not July 1, 2020

The planned hike in electricity tariffs slated for takeoff on July 1st, 2020 have been deferred to the first quarter of 2021, the National Assembly announced on Monday night.

This was the outcome of the meeting between the leadership of the National Assembly led by President of the Senate, Ahmad Lawan, Speaker of the House of Representatives, Femi Gbajabiamila and other principal Officers of the two Chambers met at the National Assembly with the Chief Executives of the federal government’s electricity regulatory body and Nigeria’s Electricity Distibution Companies (DISCOs).

Also in attendance were the Chairmen of the Committees on Power from the Senate and House of Representatives.

According to a statement by the Spokesperson to Senate President, Ola Awoniyi, National Assembly leaders were emphatic at the meeting that the timing of the planned hike was wrong even though they had not much issue with the need to introduce a cost reflective tariffs for the power sector to attract the much needed investment.

In the course of the meeting, the DISCOs too admitted that they were not well prepared for the planned hike in tariffs even though they so much desired the increase.

The meeting agreed to defer the planned hike till first quarter of next year while the leadership of the National Assembly promised to meet with President Muhammadu Buhari on the issue.

The statement said quoted the Senate President as saying that “we are in agreement here that there is no question on the justification of the increase but the time is simply not right and appropriate measures need to be put in place

“So between now and the first quarter of next year, our task will be to work together with you to ensure that we put those blocks in place to support the eventual increase in tariffs.

“There is too much stress in the lives of Nigerians today and indeed across the world because of the challenges imposed by COVID-19 pandemic and even before then, we had issues that would always make it tough for our people to effectively pay the tariffs.

“One way or the other, for this business to flourish, for this sector to be appropriately fixed, for it to attract investment, something has to give way, there is no doubt about that but it is also crucial that we look at the timing for any of our actions.”

Gbajabiamila added that “there is time for everything. A well intended programme or policy of government can fall flat on the face and never recover if you do it at a wrong time. I think we all agree to that.

“There cannot be a time as bad as this for us to increase anything. Forget about electricity, anything. Whereas, even in time of decreasing revenue, we are even reducing the pump price. I don’t know how we can justify an increase in the cost of electricity at this time in Nigeria.”

Gbajabiamila posed some questions to DISCOs and the Nigerian Electricity Regulatory Commission(NERC): “How did we arrive at the tariffs or costs. Who were the stakeholders that were present? What was the role of the National Assembly? More importantly, is the President aware of this because the President is perhaps the biggest stakeholder of all, apart from the Nigerian people?

“Whatever will affect his government is something that should concern all of us. I think this will affect his government. This timing. Not the increase. The timing. I think it will affect his government and if it is going to affect his government, we should all rally around our people, our president and the government to make sure we do the right thing.”

The representatives of the DISCOs said if the planned hike is eventually deferred till next year, the government should continue to bear the difference in the present tariff and what was considered as the appropriate tariff.

In attendance at the meeting were the representatives of NERC, Kano Electricity Distribution Company, Ikeja Electricity Distribution Company, Kaduna Electricity Distribution Company and Eko Electricity Distribution Company.

Before the meeting, the DisCos had accused the Nigerian government, especially NERC of deceit by trying to dissociate itself from the July 1 increase in electricity tariff even though the increase in tariff and the commencement date were both approved by the NERC.

Initially, the tariff increase was to commence on April 1 but was postponed because of the dislocations in the economy as a result of the Coronavirus pandemic.

Under the proposed new hike in electricity tariffs, price increases would have ranged from 60 per cent in places like Ikeja to about 73 per cent in Abuja and about 78 per cent in Enugu.

Nigerians have in unison, condemned the tariff increase, saying the electricity situation should get better first before an increase.

But the proponents of the increase said that the electricity situation cannot get better unless consumers pay appropriate prices for electricity and allow investors to make enough money to reinvest in their infrastructure.

In their statement issued by Sunday Oduntan, the Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED) in Abuja on Sunday, the DisCos decried the alleged attempt by NERC to distance itself from the July 1 commencement of increase in electricity tariff.

ANED is a group that represents the interests of the DisCos, many of whom are reluctant to tackle the government individually. The government, including the Minister of Power, has however, refused to join issues with ANED; saying it has no dealings with the association.

“We are in a regulated sector. We cannot take decision about a very critical aspect of the sector like tariff without a nod from the regulator (NERC). However, what has happened in recent days is that our regulator is warning us not to mention their name or the Federal Government in any of our communication about the tariff increase with our customers. This is certainly very unfair.”

“Many stakeholders have expressed their concern at the unusual silence of our regulator, NERC on the upcoming increase and it looks like a unilateral decision by the DisCos. We will like to inform Nigerians that tariff review (upward or downwards) is the primary responsibility of NERC as our regulator,” he said.

Mr Oduntan said that the DisCos were required to submit their proposals, adding that NERC had the final say

He said that the DisCos were surprised to receive a letter from NERC warning them not to mention their name or that of the federal government in any public communications on tariffs.

“While it is our obligation to communicate the increase, it is also important for customers to know that it is following standard processes of tariff adjustments in the sector with approvals from NERC and the Federal Government. As DisCos, we believe in the rule of law. We will only carry out lawful approval and instructions by our regulator. The proposed increase and the timing of the increase in tariffs was done by NERC. It is their statutory responsibility. DisCos alone cannot fix and approve electricity tariffs,” he said.

Mr Oduntan said that the DisCos were sensitive to the feelings and yearnings of their customers during this period of COVID-19.

He said that to demonstrate their sensitivity, the DisCos, in conjunction with the National Assembly, suggested a two-month free electricity supply for residential customers.

He said the proposal was not approved by the federal government due to paucity of funds occasioned by the reduction of national income from the sale of crude oil.

Speaking on the tariff increase, Mr Oduntan said: “The fact that the action is deliberately made to look unilateral is capable of creating public resistance, effectively setting DisCos up to fail. All DisCos had started communicating the new tariff regime, set to take effect from July 1, 2020, since last week. The communication is geared at enlightening customers about the details of the service based tariff increase to ensure customers were fully aware about how it pertained to them and the supply band they fall under.

“The truth is that we are the public facing arm of the sector, but what we collect is shared by everybody, including NERC. Our interest is in the nurturing of a commercially viable power sector. Political considerations and bickering will certainly not take us there.”

However, Mike Faloseyi, Assistant General Manager ,Government and External Industry Relations, NERC, said that ANED was not their licensee and that NERC does not carry out its regulatory activities on pages of newspapers.

“They are Nigerians, they are free to comment and they have made their comment,” he said.

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