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Published On: Wed, Jan 21st, 2015

Electricity ‘fixed charge’: Are Nigerians paying for darkness?

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Electricity-polesBy Ochiaka Ugwu

The recent increase in electricity tariff is expected, however, the refusal by Nigerian Electricity Regulatory Commission (NERC) to abolish ‘Fixed Charge’ is becoming a source of worry to many subscribers who could not explain why they will continue paying for a service not rendered. Most of them have described the practice as paying for darkness. While some say the charges in whatever guise are unnecessary and maintained that stable power supply must be in place before any increase in charges.

While justifying the retention, Chairman of the commission, Dr Sam Amadi said power consumers in the country will pay N750 as fixed charge for electricity instead of N1, 500 that should have been paid.

According to NERC, the decision to retain the current fixed charge was reached after the last minor review of tariffs, but stated that if the review had not been carried out, power consumers would be paying about N1, 500 as fixed charge.

He said, “Many of the customers should be paying a fixed charge of about N1, 500. Now, the adjustment has resulted in a decrease in such that the fixed charge will not change. If this review was not done, the fixed charge should have been about N1, 500 in some places.

“But now, the reduction is that instead of having an increment in fixed charge, the consumers now have a decrease from N1,500 that would have been paid from June 1 to N750 for most places.

NERC has always stressed that fixed charge represents the capacity charge on customers for power supplied by power generating and transmission firms to the DISCO. They claimed it has been there and never a new innovation. It was formally N500 and was later increased to N700. The fact remains that once you are connected to power supply you pay fixed charge every month whether there was power supply or not.

However, the controversial retention of electricity fixed charge nationwide has generated a lot of controversy. The complaint cut across Civil Society Organisations including students, traders, house owners and politicians, who labeled the continued collection of fixed charge by the Electricity Distribution Companies, as illegal.

They inquired on the rationale behind incurring fixed charge whether they have supply or not each month.

In this outer frustration occasioned by this inexplicable reason of this charges, consumers nationwide have called for a stop to what they tag the “unfounded and illegal collection”.

According to the Electric Power Reform Act in section 1, subsection 4-1 “every DISCO shall issue bills for electricity USED at each consumer’s supply address at regular intervals. The intent and purpose of this law was for consumers to be billed for electricity consumed either with prepaid meters; you recharge or with analog you are charged for that which you used. The law never provided for charging citizens fixed fees like DISCOs are doing.

The reality is that if you buy a N1, 500 recharge for your prepaid, DISCO collects N750 as fee; if you consume N3, 000 a month on analog meters, they give you bill of N3, 750. It is the N750 they will remove. Only god knows why DISCO is charging people for bills not incurred.

To add to the difficulty, they are not even maintaining the meters or replacing faulty electric poles and not even supplying prepaid meters for which many have paid and are yet to get them since last year. Moreover, they charge VAT. All the people are saying, is that the fixed charge is illegal and must be discarded like a pack of card.

Electricity consumers have freely expressed their grievances against DISCO on the contentious fixed charge of N750 which it tagged “illegal and extortionary”. Also included on the list of grievances was failure to supply pre-paid meters already paid for, estimated billings without meter checks and poor power supply even when customers pay monthly electricity bills.

By making the collection from ignorant consumers they alleged that DISCO has committed to fraudulently enriching it’s management at the expense of the poor, hapless and innocent Nigerians, who crave electricity at home and for business but do not get any during the month, but most part with a reasonable amount in the name of fixed charge.

Regrettably, while Nigerians have been complaining of the illegal fixed charge and high electricity tariff without a commensurate service on the part of DISCOs, the federal government took a further step in its power sector reform programme by announcing an upward review of tariff from N8.50 to N10 per kilowatt. They noted the move was aimed at making the power sector attractive to investors who have been arguing that the tariff in Nigeria is the lowest in the world and as such, it does not make the market viable.

The price hike is a deviation from the promise made by the commission that it would not increase tariff until there was a marked improvement in the power supply. Even last year, the federal government said it would crash the “real cost” of electricity tariff by 65 percent, as part of the measures to check the present trend whereby exorbitant real cost of electricity consumed by Nigerians has led to high cost of goods and services in the economy. In the light of the above statements, many consumers have started to wonder what the federal government is up to.

This decision to increase electricity tariff regardless of DISCO’s poor services has drawn a lot of flak from Nigerians. Because there is no guarantee that the rise in tariff would bring about any improvement in power supply, since the goal of increasing power supply to about 5,300 megawatts was not met, the shortfall will continue to reflect on the poor performance of the DISCOs.

From all indications, what Nigerians want now is certainly not increase in power tariff or retention of the inexplicable fixed charge, but increase in current supply that will ensure steady power. DISCOs should be committed to supplying constant electricity to consumers, and surmounting some of the challenges they met on ground including, “aged, undersized and over extended high and low tension feeders, over billing of customers, no service orientation, staff illegally collecting money, illegal connections.

Others are power theft, inadequate metering, inadequate power supply, low level of information available, poor health and safety practice, poor maintenance practice and others. They should strive to provide over 8,000 backlog of prepaid meters paid for by customers under the previous regime; high volume of estimated billing, liabilities from PHCN, and power theft. With all these manifesting, there is no doubt that electricity consumers will assist DISCOs in providing effective power to them.

 

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