• Friday, March 29, 2024
businessday logo

BusinessDay

Adequate oversight of DisCos will reduce consumer opposition to tariff increase – analysts

Adequate oversight of DisCos will reduce consumer opposition to tariff increase – analysts

Analysts say that one way to reduce widespread anger over tariff increase, the Nigerian Electricity Regulatory Commission (NERC) should provide adequate oversight of the activities of DisCos to forestall a situation where inefficiencies of DisCos are passed on to customers.

“What is the regulator’s position in electricity governance structure in considering consumers’ interest. To what extent has the Discos obeyed the performance agreement they signed with the regulator. Is there nationwide consultation with the consumers on tariff and where is the report?” Princewill Okorie, president, Association of Public Policy Analysts said on Tuesday at a Nigeria Television Authority programme monitored by BusinessDay.

Nigeria’s power sector riddled with problems of inefficiency from generation, distribution and transmission. For example, Nigeria has the capacity to generate about 13,000MW of power but can only generate around 5,000MW. Most of this power is wasted due to a fragile electricity grid and DisCos poor distribution infrastructure causes about 2,000MW being stranded.

Read also: Service-based tariff delivers a pile of money in Nigeria’s troubled power sector

This situation along with poor tariffs, lack of metering and poor governance from DisCos fuels consumer disaffection with electricity tariff increase.

Okorie called on the regulator to engage more with the consumers and ensure priority is given to customer enumeration and data which was part of the performance agreement signed with the distribution companies.

“In section 31 of the Electricity power sector reform act 2005,the order talked about tariff that is fair and has cost recoverability for investments. Where are the evaluation report on the state of consumers for 2020 by the regulator. These are the questions that the consumers are raising.”

“If there is bi-annual tariff increase, there should be annual conference with the consumers. What of the performance agreement the Discos signed with NERC, the customer enumeration, can we get an update and not just tariff review.”

Okorie further said that the consumers at the states and local governments where the bulk of the payment is made are not adequately engaged on their concerns promoting the perennial outburst in the tariff review.

Sam Amadi, a former chairman of the NERC reacting to the perennial problem of discontent around electricity tariff review, said the Nigerian electricity market has not attained the expected stability after privatisation.

“If I’m buying my product and spending in dollar, there must be reflection of certain variables in the cost. As spelt out by the regulation on the bi-annual multi year tariff order methodology. The cost of gas, inflation, exchange rate are factored in these variables.

“The reason why we talk about tariff all the time is that whereas the cost of production is increasing in this market, the supply services is not increasing.”

He suggested to NERC to audit Discos cost profile to weave out inefficiency in their sector, while ensuring that there is adequate data to drive efficiency in the corporate services of the electricity supply industry.

Meanwhile, the regulator has approved a service based tariff in plan last year where customers pay according to the number of hours of power they get daily. This came along with a tariff review but a new tariff increase planned for January has generated intense anger leading to the minister of power calling for its suspension.