• Sunday, May 19, 2024
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BusinessDay

How Nigerians can survive new electricity tariff hike

Why Transcorp sells electricity outside Nigeria

…As Consumers battle DisCos over shirk of responsibility

…Say Coys push replacement of damaged transformers, others to customers

…Don’t self-procure transformers without agreement with DisCos – NERC warns

By Iniobong Iwok, Taofeek Oyedokun and Seyi John Salau

As Nigerians continue to grapple with the recent hike in electricity tariff which has added extra burden to their livelihood, a United Kingdom (UK)-based Project Management Consultant, Precious Onyenweaku has urged Nigerian electricity consumers to take lessons from other countries with similar experiences in recent times by deploying smart measures to cope with the increase.

According to him, Nigerian electricity consumers can take simple and consistent steps to ensure that the hike in electricity tariff does not put too much pressure on the overall wellbeing of their families, which may result in social crisis.

Read also: Time to activate green energy and the Electricity Act 2023 following the electricity tariff hike

Onyenweaku, who recently graduated with a master’s degree in International Management from the University of the West of Scotland, Scotland in the United Kingdom, noted that his master’s dissertation which dwelled on the influence of rising costs of energy on the energy consumer behaviour of international students in Scotland was intended to explore the various ways by which electricity consumers in UK adapted to the increase in tariff in recent period.

He disclosed that the study which investigated the rise in energy prices across Scotland and other places across the globe indicated that increases in energy costs in most countries often impacted households in several ways including economic, social, emotional and material.

“However, little is known about the effects of high energy tariffs on a unique growing segment of the Scottish population which is international University students. Therefore, I conducted this study to investigate the impact of rising energy costs on the consumer behaviour of international university students in Scotland which is relevant to other demographics and residents both in the United Kingdom and elsewhere, including Nigeria,” he stated.

According to Onyenweaku, the study hinged on consumer behaviour theory and analyses, and the effects of energy costs on curtailment and efficiency behaviours evident among international students in Scotland.

He noted that factors such as personal, cultural, social, economic, and pro-environmental perception were taken into cognisance in the design of the research questionnaire and data collection from 220 participants.

According to him, the study adopted descriptive statistics, multivariable linear regression, and ANOVA for data analysis. He stated further that a pivotal revelation from the study indicated that all participants experienced an elevation in energy costs post-immigration, with 70.5 percent observing a significant surge.

However, in exploring energy consumption habits, he disclosed that the study underscored a compelling inclination towards energy-saving practices, with 72.73 percent of respondents consistently turning off lights when exiting rooms.

Read also: Here is how Band ‘A’ electricity tariff hike affects all Nigerians

Also, the linear regression analysis explained the implications of rising energy costs on consumption behaviours, revealing an unexpected positive correlation. The findings also indicated that more energy-saving changes are linked to significantly lower curtailment in consumption patterns.

The study further indicated that households relying solely on gas as an energy source exhibited significantly distinct energy costs compared to those utilising both gas and electricity.

Onyenweaku disclosed further that findings from the study revealed a crucial link between energy awareness and consumption. According to him, students, particularly those from Nigeria and India, demonstrated significant energy-saving behaviours like switching off lights and appliances. This finding “underscores the complexities of energy consumption” but also offers “actionable insights” for Nigerians.

He emphasised the importance of investing in energy-efficient appliances and home improvements. He further suggested cost saving initiatives that Nigerians would deploy to cut energy costs and lessen the financial burden on households. These measures may include, “A review of energy ratings and consumption of existing appliances, and buildings that benefit from natural light and ventilation.”

According to Onyenweaku, Nigeria’s geographical location presents a unique opportunity for renewable energy solutions. He suggested that households could increase patronage in solar installations, for small-scale purposes like charging phones and to power lights.

However, he suggested further that those with the financial means can integrate solar power with the public grid, which offers greater potential. He however emphasized the critical role of energy education and awareness, particularly in rural areas.

Onyenweaku also identifies the National Orientation Agency (NOA) pivotal role in educating Nigerians on cut-saving measures, and opined that by educating communities, Nigerians can make informed choices that benefit both their wallets and the environment.

He further acknowledged the challenges faced by Small and Medium Enterprises (SMEs) due to rising energy costs, and suggested that businesses may need to overhaul or reduce reliance on energy-intensive machinery to save cost.

Onyenweaku further advocated that research institutions should be supported in developing local interventions that will provide sustainable and cost-effective solutions for Nigerian businesses.

He noted that some negative effects of the energy costs could push households into poverty, result in reliance on unsustainable alternatives, depression and other mental concerns, poor academic performance among students, stifle SMEs, and impact on overall costs of living.

However, he remains optimistic that by promoting energy curtailment, investment in energy efficiency, and pro-environmental practices, both the government and households can mitigate the effects of the recent hike in tariff.

He also advocated for local interventions tailored to Nigeria’s specific needs that offer the best path to adaptation and a more sustainable future for electricity consumers.

Onyenweaku, a recipient of the ‘2022 Entrepreneurial Spirit’ and ‘Court Medal’ awards, along with the ‘2023 Aspire Employability’ recognition; further disclosed that his research was informed by his academic background and extensive professional experience.

However, as a scholar, he brings a unique blend of academic rigor, practical understanding of energy business and prior success in sales management within Nigeria’s FMCG sector, offering valuable insights particularly relevant to the Nigerian context.

Coys push replacement of damaged transformers, others to them

About one decade after the privatisation of the power sector in Nigeria, electricity consumers still bear the responsibility of buying transformers, cables, poles, meters and other line materials.

This is despite the frequent increase in tariff across Nigeria and inability of the DisCos to provide prepaid meters to more than half of electricity consumers.

A consumer rights obligation regulation document from NERC highlights the rights enshrined in the Electricity Power Sector Reforms Act (EPSRA), 2005. The content of the document places the rights of buying, replacing and repairing electricity transformers, poles and cables on the 11 DisCos.

But investigation by BusinessDay Sunday reveals that the reverse is the case across Nigeria.

Presently, many Nigerians are upset and are lamenting the alleged ill-treatment being meted out to them by the DisCos.

Electricity consumers say DisCos’ officials do not respond promptly to distress calls of fixing damaged transformers, cables and some other items. On many occasions, cost of replacement of damaged transformers, cables, even fuse is borne by them.

Many communities in Lagos and across the country have lamented the deliberate act of electricity distribution companies shirking their responsibilities at the expense of customers.

Jelilat Babatunde, a trader in the Oko Filling area of Igando in Lagos State, lamented the erratic power supply in her community.

Babatunde, who sells soft drinks and other foodstuffs, blamed the situation on the failure of Ikeja Electricity Distribution Company to energise a transformer which members of the community bought more than three years ago.

She said: “Our transformer is very old and the community contributed millions of naira to buy a transformer in 2020 because Ikeja electric refused to give us one despite several appeals.

“The community was happy when the transformer arrived, hoping that it would be the end of the erratic power situation in the area. The situation has remained the same because Ikeja Electric refused to connect it. They insisted that the community must buy the cable and other materials needed to connect the transformer.”

According to her, the transformer is decaying as members of the community struggle to raise another millions of naira to energise the it.

Corroborating Babatunde, another resident of the community, Olawunmi said the power situation in the area has gone from bad to worse in recent times. She lamented that Ikeja Electric has neglected the community, while they pay monthly bills, they still bear the cost of maintenance and installation of transformers.

Another electricity consumer, Joy Uwa, said she rented a one-bedroom apartment in Abeokuta, but thought the electricity challenge in the area was just brief, but after spending two weeks without electricity she was informed that the transformer in the area was bad, but was replaced by residents after the refusal of the DisCo.

Uwa stressed that he was asked to pay N400, 000 to connect to the transformer, of which she paid N70, 000 eventually before power supply was restored to her.

According to her, “It was sad after paying N300, 000 for house rent and I had to pay such an amount again for the transformer; what is the work of the DisCos?

“How come the government doesn’t task them to play by the rule? It is a sad reality that Nigerians are being extorted by these individuals and nothing is being done. Personally, I would advise the Bola Tinubu administration to review the sale of the power company to the DisCos.”

Several other Nigerians spoke on the difficulty they had faced in repairing and replacing damaged transformers, cables and other equipment without the support of DisCos despite paying bills monthly.

Energy experts say that stakeholders in the privatisation arrangement have not played their role the way it was envisaged. They said the NERC had failed to act and protect the interest of electricity consumers in the country, but rather was serving the DisCos.

Recent hike in electricity tariff was mentioned; however, some experts disagreed with the government decision to increase tariff, noting that it would not solve the problem in the sector.

Many of the experts say the government should rather compel the DisCos to solve the infrastructure gap in the sector and embark on mass metering across the country before raising tariffs.

“The power sector to me reflects the generality of Nigeria’s corruption, what we have seen in the sector is government’s insincerity and avoiding the real issues,” Lucky Onoh, energy expert, said.

Kunle Oke, a former staff of defunct Power Holding Company of Nigeria (PHCN), said that the major problem in the sector was NERC’s refusal to apply the law and sanction DisCos that are not keeping to the rules.

“The NERC knows that Nigerians buy transformers and the rest, they are just pretending.

“The rule was that DisCos are supposed to provide all materials and transformers when needed by consumers, but since they are unwilling to do that, helpless consumers resort to self-help, purchase them and hand it over to the DisCos for installation in their community.

“The law says that the DisCos should repair or replace faulty cable transformers, but because there is no enforcement by the Federal Government, that is why consumers are being exploited.

“I think NERC should begin to work, rather than mere talk during meetings with consumers. If they should sanction any of the DisCos that is not keeping to the rule, they would sit up,” he said.

Sunny Ikhioya, public affairs analyst, lamented that Nigerians were being short-changed by the DisCos, with the frequent increase in tariff despite epileptic power supply, noting that buying of transformers and cables was not new.

“It is not new, even government officials buy transformers, cables for their communities, because they know the DisCos would not buy them.

“The major issue here now is the estimated billing, most people cannot afford prepaid meters and when they can even afford you can’t see it to buy; it’s such a sad situation,” Ikhioya said.

Okon Louis, resident of Etinan Local Government Area, Akwa Ibom State, said almost the whole of the council has been in blackout in the last four years, due to damage on electricity cables and transformers by vandals, but that calls and visit to the DisCo’s office in Uyo, the state capital, for solution had not yielded any fruit.

Louis further pointed out that the people of the council took up the responsibility to buy a new transformer more than a year ago, but that the transformer had not been fixed for power to be restored because of bureaucracy and alleged extortion by the DisCo’s officials.

“We have not had light in my local government for four years now; some vandals took oil away from the transformer and destroyed some cables.

“We visited the DisCo’s office in Uyo, but there was no solution, we decided to contribute money, after a long while and buy a new transformer, but they are still there unfixed, the DisCo’s officials are saying all sorts of things must be provided before they fix it,” Louis said.

Don’t self-procure transformers without agreement with DisCos – NERC warns

Speaking recently at a consumer complaints resolution meeting with the customers of the Eko Distribution Company, Aisha Mahmud, NERC’s commissioner and customer affairs officer, warned electricity customers against self-procurement of transformers without a formal agreement with distribution companies (DisCos).

Mahmud said it was not the responsibility of customers to procure transformers for the DisCos.

She said if such happens, the customers and the DisCos must sign an undertaking.

Addressing the funding constraints within the Nigerian Electricity Supply Industry (NESI), particularly concerning the national mass metering scheme, she pointed out the financial struggles experienced by industry players, stressing the need for adequate funding and financing mechanisms to support initiatives aimed at improving metering infrastructure and addressing the deficit.

“Customers often overlook their rights and entitlements; paying for electricity should guarantee not just power but a superior service experience, and customers should assert their rights to quality service when paying their bills,” she said.

“It is crucial for customers to understand that investing in the distribution network, including transformer purchases, is not their responsibility.

“While the cost is factored into the electricity tariff, if customers choose to invest in infrastructure like distribution transformers, the law permits DisCos to incorporate the investment into the tariff, enabling them to earn returns over the asset’s economic lifespan,” Mahmud said.

According to her, “If about N100 million, for instance, is invested in the purchase of the transformers by the DisCos, it is expected to be spread over fifteen years within the economic life of that asset, and recovery of the cost gradually deducted by customers’ billings.

“NERC came up with regulations, customers can fund the purchase of the direct transformer meters, and they will be refunded.

“In this case, what the regulation stipulates is that the customers have to sign an agreement with DisCos stating that a certain amount of money has been used to purchase the transformer, and a refund will be made over a certain number of years based on the agreement with interest and dispute resolution clause.”