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Published On: Mon, Dec 29th, 2014

No, to another hike in electricity tariff

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By Emmanuel Asiwe

An amended “special” Multi Year Tariff Order to be known as MYTO 2.1 officially took off on Christmas eve. Essentially, from last Wednesday, electricity tariff went up. However, because service delivery has not improved significantly, NERC announced that distribution companies will not increase tariff for residential consumers for six months. Other customers would, however, witness an increase in what they pay for electricity. Needless to say the hike is insensitive, anti-people and unacceptable and should be shelved in the interest of peace.

Hiking tariffs without a corresponding increase in power supply is immoral. The question must be asked: are Nigerians not suffering enough and why would a government consider adding to their heavy burden?

Sam Amadi, chairman of the Nigerian Electricity Regulatory Commission (NERC) had explained that the increase is premised on verified losses that DISCOs were facing and the new price of gas, which took effect this month. “The implication of the increase in losses level is that the tariff will go up because the cost of distributing power will increase. Each of the distribution companies will, however, design a tariff on how to recover their revenue because what NERC has done is to insist that they will not increase tariff for R2 customers for six (6) months.”

The MYTO tariff schedule shows consumers are paying higher on two fronts – the fixed cost and the cost per kilowatt of electricity have all increased. So, whether the new tariff takes effect now, or in six months, there is still no justification for consumers to pay for what is not available. There is also no justification for compounding people’s poverty and misery, by imposing a tariff hike to compensate an inefficient system

The logic of hiking tariff as a precondition for investor participation, is unjustifiable, and certainly, not in the national interest. If the hike is aimed at pleasing investors, it subjects Nigerians to more suffering, indeed double jeopardy. People should not pay for what is non-existent. The ideal thing is to work towards putting power first. Thereafter, it would be clear to all and sundry that there is a change that could warrant tariff increase. As things stand, there is no guarantee that in six months, after subjecting consumers to high charges, there would be commensurate increase in power supply, which is what Nigerians want.

Isn’t an irony that Nigeria needs a relatively puny $6 billion to invest in the oil and gas sector, while the country currently has about $24 billion lying idle in the excess crude account? These funds should be invested in critical infrastructural and economic projects. The Jonathan administration should urgently begin to build a national gas grid that is wholly Nigerian-owned or in partnership with credible private sector players within a public-private partnership.

The grid can be built within four years, and should have capacity to handle gas volumes far in excess of the present limited domestic and regional demand. Such gas infrastructure will stimulate further domestic demand for expanding electricity requirements and various industrial purposes as well as facilitate domestic gas competition. Right now, as far as power is concern, the dark days are, sadly, far from over.

Asiwe wrote from Abuja

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