Nigerians are outraged over the purported increase in electricity tariff; it is understandable considering that service delivery is still poor. But this sector cannot grow if tariffs do not guarantee commercial returns. An increase alone, however, is insufficient to solve the problem.
While the DisCos are correct to say that current tariffs are unsustainable, we do not believe more income is the solution, especially when they have not shown fidelity in remittance to other market operators. We commend, the Nigerian Electricity Regulatory Commission (NERC), the regulator, for trying to address this tariff gap but we urge it to stay the course. It must resist political interference and do what is necessary.
NERC has been making concerted efforts to contain the impression that it was raising tariff, we think it should be informing the public why this needs to be done. It gains credibility by also telling the public its plans to ensure electricity customers are metered and how it has intervened in cutting down estimated billings. This is a sore point for many consumers; it is not the rate of the tariff but the guarantee of power after paying. Some pay double the current rate on self-generation through dirty generators.
According to section 17 of the MYTO -2015 order, the tariff should be reviewed twice every year measured against variables such as inflation rate, gas prices and foreign exchange rate and generation capacity. This has not been done since 2016. The latest review last December does not still guarantee a cost reflective tariff. But it is a good start.
Improved measures to hold DisCos accountable are also commendable. For instance, DisCos must now remit at least 45 percent of the value of power they receive (before they only managed paid 30 percent).
The Commission has also mandated the DisCos to cut down their Aggregate Technical, Commercial and Collections (ATC&C) losses. We fear this is unrealistic as some may struggle, particularly those that are highly indebted or in crisis-prone areas like Yobe.
We also do not understand the rationale for the Service and Market Operator to get their remittances in full, if everyone is taking a haircut, it makes no sense to exempt them considering that they are part of the problem.
Yet, the major factor constraining adequate power supply in Nigeria is technical. The national grid collapses from too little or too much generation. Transformers and base stations are inadequate and many are worn and in need of repair or replacement. Gas turbines waste away due to inability to get feedstock to power them and many power plants lie desolate.
It is tempting to think the problem with the power sector is money but over N1.3trillion intervention by the Federal Government has done little to dent the problem – throwing money at the sector is about as helpful as trying to stop a moving train by shouting at it.
Analysts say the bulk of the problem in the sector is largely human. It starts from government officials interfering with a sector that is supposedly privatised and overruling the regulator. DisCos have been unfaithful in fulfilling their performance agreement and operators often work in silos. Generation companies are not proactive in commercialising the power they generate and some consumers bypass meters to steal power.
To begin to solve some of the challenges in the sector: all the operators, the regulator and the government should shut themselves in a room and tell each other the truth; they are culpable and have failed Nigerians. All that is required to salvage the sector is already in their possession.
