• Thursday, April 25, 2024
businessday logo


Electricity tariff doesn’t reflect production cost, say DisCos

Stable and transparent policymaking is essential to reach Nigeria’s electrification targets

Electricity distribution companies (DisCos) in Nigeria have said the tariffs being paid by consumers do not reflect the cost of production.

The Association of Nigerian Electricity Distributors (ANED), the umbrella body for the DisCos, attributed the recent hike in tariffs to inflation, foreign exchange and underinvestment.

Sunday Oduntan, executive director, of research and advocacy at ANED, said the increase in production cost would affect tariffs.

“We need to invest more into the system as we buy equipment every day to provide service,” said during a discussion on LTV Morning Delight programme on Wednesday.

He said the power sector, DisCos and electricity tariff cannot be isolated from macroeconomic challenges in the country.

“In looking at the tariff, we have to look at inflation and foreign exchange. At least 70 percent of the equipment we use in the power sector is imported. As long as the cost of production goes up it will affect the tariff,” Oduntan said.

He said the recent changes in tariffs are part of a five-year Multi-Year Tariff Order that was done last year, effective January 1, 2022.

“Prior to that, there were public consultations in line with the law all over the country carried out by the regulator. They are the ones that set the tariff,” he said.

“It was also published on the NERC website on 4 May 2022, showing the tariff that will be paid from 2022 to 2026.”

Oduntan said the commission made it clear that there would be a biannual review of the tariff in June and December 2022.

Read also: Buhari to commission 650,000 bpd Dangote Refinery January 24

He said the commission would have properly announced the tariff change before taking action. “There should be proper communication at the points when people need to be reminded about what will happen.”

According to Oduntan, areas with more power supply will be paying more, while those who have not been well served in terms of the quantum of supply, in most cases, have no changes.

“The hike in electricity tariffs is not a huge universal change across the board. We are contending with finding ways to improve the services by investing more in the system. The tariff we are paying in Nigeria today does not reflect the actual cost of production,” he said.

“It is a gradual process. The commission does not want to bring a huge hike in tariffs at once; it will be difficult for people to cope. What you pay now depends on how many hours of energy you get.”

On the issues of metering, he said the regulator has approved the third-party meter suppliers (meter manufacturers) to be able to step in and supply meters.

“You can approach your DisCos and apply for a meter under the Meter Asset Provider (MAP), and you will be metered, usually within 15 days,” he said.

On bad customer relations, he advised DisCos not to attend to Nigerians as if they are doing them a favour. “Those who represent us across the counter, customer care in particular, have to do better.”

Oduntan said whenever customers experience bad customer relations, they should report immediately. “You all have phones; it is now time to take their pictures,” he said.

“Apart from going to the customer care centre, which is normally supposed to be the best way, we have a customer service line customers can reach. You can also report your issues through their websites through their phone numbers and email addresses.”