The anticipated increase in electricity tariff from April 1 will be delayed by at least three months because of the impact of the coronavirus pandemic which has led to a shutdown of most economic activities in the country.
Nigeria’s electricity regulator, the Nigerian Electricity Regulatory Commission (NERC), had published a review of the Multi-Year Tariff Order (MYTO) 2015 in December, raising tariff by 30 percent on average with effect from tomorrow, but BusinessDay learnt that the regulator will be announcing today that the new tariff order will be delayed till July 1, 2020.
The delay will give the regulators the chance to negotiate and extract commitments from the DisCos for service level improvements which must be commensurate with the extent of the planned tariff increase.
Industry players are concerned that an upward review in tariff at this time will aggravate the misery of Nigerians and make redundant efforts by the government to mitigate the impact of the economic slowdown and the nationwide lockdown occasioned by the coronavirus pandemic.
President Muhammadu Buhari on March 29 announced restriction of movement in Lagos, the commercial capital, Abuja, the seat of power, and Nigeria’s rapidly industrialising state, Ogun, to limit the spread of Covid-19.
Various governments are seeking ways to ameliorate the hardship their citizens would face on account of the shutdown and a decision to raise electricity prices appears impractical.
“Implementing a tariff increase when the economy is virtually on lockdown does not sound right,” said Ayodele Oni, a Lagos-based energy lawyer.
Nigeria’s electricity supply industry appears to be jinxed. The first attempt to increase tariffs after the privatisation of the sector was reversed 10 days after it had taken effect in 2015 by Nigerian Electricity Regulatory Commission. The reversal was seen as an attempt to pander to the electorate during the 2015 elections.
Five years later, the same fate has befallen the sector as the scheduled tariff increase has been postponed for three months a day before it was set to take effect.
“Already people struggled to pay the current tariff at a time when the economy was relatively better; now when there is a shutdown, it will be near impossible,” Oni said.
A major contention will likely erupt if the regulator goes ahead to impose penalties on distribution companies (DisCos) for failing to improve service delivery by at least 50 percent when the tariff increase is introduced later in the year.
In the past, the DisCos have argued that service delivery was hampered by the inability of the Transmission Company of Nigeria (TCN) to wheel all the generated power to their stations.
Nigeria’s weak transmission lines sometimes see a quarter of the power sent from generation companies lost before they get to areas they are needed.
NERC will now ensure that in the case where the TCN fails to deliver an agreed amount of power to a specific DisCo, the transmission company will itself be penalised.
DisCos too are often accused by the TCN of rejecting electricity supplied to them. The regulator recently introduced a capacity charge, wherein DisCos would be compelled to pay for the load they reject, in a bid to address this concern.
“A further delay in the implementing a tariff review will mean that the challenges faced by the players will continue,” said Chuks Nwani, another energy lawyer based in Lagos.
DisCos recorded a cumulative loss of N787 billion in their 2018 financials and have only managed to keep the lights on due to interventions by the Federal Government which has subsidised their operations to the tune of about N2 trillion.
Nwani said that now may not be the time for the regulator to enforce a new service improvement agreement seeing that DisCos would be constrained further with delay in tariff review.
“The DisCo owners already have an agreement with the Bureau of Public Enterprise which is more comprehensive and goes right at the heart of their operations, a new agreement may not be necessary,” said Nwani.
Under the planned tariff order, according to the publication, for residential customers (R3) in Abuja who currently pay N27.20 per kilowatt unit, they are to now pay N47.09; commercial customers (C3) that paid N27.20 per unit since 2015 when the tariff was last adjusted are now to pay N47.09 per unit.
According to NERC, Ikeja Electricity Distribution Company’s residential
The commercial customers (C3) that paid N24.63 per unit since 2015 are to now pay N38.14 per unit. The industrial customers of the IKEDC (D3) that paid N25.82 per unit are now to pay N35.85 per unit.
Meanwhile, the Nigerian government has confirmed the second death from COVID-19 (coronavirus) in the country.
Osagie Ehanire, minister of health, announced this on Monday during the Presidential Task Force Briefing on COVID-19 in Abuja, the nation’s capital.
“We have intensified contact tracing and our strategy remains to promptly detect cases, isolate them, and follow up with their contacts and also isolate and treat, in order to reduce the spread of the infection,” the minister said.
“As of today, the 30th of March, 2020, we have recorded 111 confirmed cases of COVID-19 in Nigeria of which 68 are in Lagos, 21 in the FCT, seven in Oyo, three in Ogun, two in Bauchi, two in Edo, two in Osun, two in Enugu, and one each in Benue, Ekiti, Kaduna and Rivers States,” Ehanire said.
He stressed that in Nigeria, majority of the cases were persons who came in from overseas.
He also informed that all retired but able-bodied staff of the Nigeria Centre for Disease Control and the Federal Ministry of Health were being recalled.
Ehanire warned Nigerians to protect the elderly among them, as well as those having underlying health issues, as they were the most vulnerable.
Five coronavirus patients who had been receiving treatment at the Infectious Disease Hospital, Yaba, Lagos, were also discharged on Monday after further tests carried out on them returned negative. This brings to eight the total number of discharged patients.
Boss Mustapha, secretary to the government of the federation (SGF), informed that the briefing would be a daily event and that the purpose was to give an update and minimise the incidence of fake news in the country.
Mustapha stressed that the briefing would be the only approved briefing of the task force, although appearances on TV by relevant members would be allowed.
He emphasised that President Muhammadu Buhari has constituted a committee headed by Vice President Yemi Osinbajo to care for the economic challenges that the situation may bring for the time being.
The SGF also clarified the controversy triggered by the restriction of movement in Lagos and Ogun States, as well as the Federal Capital Territory (FCT).
He allayed the fears of Nigerians, saying workers in the financial institutions were not included in the stay-at-home order declared by the president in his Sunday broadcast to the nation.
ISAAC ANYAOGU & ANTHONIA OBOKOH
