Consumers Kick Against Proposed Increase In Electricity Tariff | Independent Newspapers Limited
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Business, Power

Consumers Kick Against Proposed Increase In Electricity Tariff

Posted: Sep 8, 2015 at 12:14 am   /   by   /   comments (0)

By Phillip Oladunjoye,


These may not be the best of times for the management of the various Electricity Distribution Companies (DISCOs) as their intentions to increase electricity tariff are being met with stiff opposition by consumers.

The DISCOs are complaining that the current tariff regime could hardly meet their operating cost after all the deductibles but their efforts to increase the tariff are being rejected by the people.

The Discos had sought the attention of the vice president, Yemi Osibajo on the issue and the vice president has also directed the DISCOs to consult the consumers and get favourable response before he could dabble into the matter.

Based on this, the management of Ikeja Electric (IE) had during a two day consultation on tariff review with stakeholders and consumers in Lagos recently, appealed to consumers within the zone to embrace a cost reflective tariff so that the company would serve them better.

The Chief Executive Officer of the company, Engr. Abiodun Ajifowobaje, said that the forum was part of what was designed by the Nigerian Electricity Regulatory Commission (NERC) as a process to determine new tariff structure for its consumers.

“Instead of NERC to fix the new tariff for electricity consumers, they now asked the Distribution Companies (DISCOs) to consult consumers in the different zones and come back for approval.

“Consequently, we have to consult you on the way forward,” he said.

Reasons For Tariff Increase

He explained that the DISCOs were just like a daily collector, adding that majority of the money paid to them were going to Generating Companies (GENCOs) and Transmission Company of Nigeria (TCN).

“Of every N100 collected from our consumers, only N15 goes to our pocket. We pay N60 to GENCO and TCN will take N15 while others like NERC will share N10, so we will be left with only N15 out of which we pay our workers salary and replace faulty equipment and others. To be honest with you, because we do not have a cost reflective tariff, most of the DISCOs have not even paid the other chain.

“Due to the crisis of litigation against the proposed tariff review, we have met with the Vice President, Mr. Yemi Osibajo on the issue. The Vice President has called on DISCOs to go and negotiate with consumers and come back with good reasons for the tariff review,” he said.

Ajifowobaje urged consumers within the zone to be objective in dealing with the issue, adding that it would be difficult for the company to obtain loan from banks if they do not have cost reflective tariff.

The Director, Association of Nigerian Electricity Distributors (ANED), Mr. Olurotimi Oduntan, said that energy was being subsidised by the Federal Government before it was privatised.

Oduntan said that there were lots of gap in the business because they were still operating at the last tariff which was based on exchange rate of N158 per dollar while dollar was now around N200 per dollar.

He said that due to the present tariff structure, DISCOs were not making any profit and if things continued this way, the power business might collapse.

The director said that the purpose of the forum was not to increase the present tariff but to open book and go through them together.

The director urged the consumers within the zone to take the advantage of the forum to find way forward so that both the consumers and the investors would be happy.

Also speaking, the Director of Finance, IE, Mr. Aigbe Olotu, said that six active members of the value chain are being paid money from what they collected at the end of the month.

Olotu said that 90 percent of what they used to produce electricity supply was in dollar and the Central Bank of Nigeria official rate for power sector had increased to N198 per dollar.

The director said that three factors responsible for the gap in the business include cost of gas, exchange rate and inflation rate.

He said that despite the fact that all these had increased, the tariff remains the same.

Olotu said despite all these, some consumers in communities under the zone were using 28 per cent of their energy illegally.

He said that as result of all these, DISCOs were losing more than N11bn monthly, adding that if these continued, they would run into difficulty.

The director said that all these called for the tariff to be reviewed because there was need to stabilise power in the country.

He agreed with consumers on the elimination of fixed charge but said that the charges would be included in energy consumption by the consumers.

“We have listened to consumers opinion on elimination of fixed charge, but this will be included in your energy consumption.

“At least you will know that if there is no power, you will not be charged. Everything will be based on energy consumption,” he said.

He, however, assured consumers that if there was a rise in tariff, gradually the tariff would come down as time goes on.

Similarly, the management of the Ibadan Electricity Distribution Company (IBEDC) said that it would soon engage its customers in interactive sessions on the review of tariff.

IBEDC’s Osun Regional Branding and Communication Officer, Mrs. Kikelomo Owoeye, said that the plan to review its tariff was sequel to the advice given to it by NERC, in view of the realities on ground and to enable the distribution companies to be able to remain in business.

“Tariff review is necessary to ensure that electricity tariff is set at levels that are reasonable and cost effective to our customers and ourselves.

“We have done a proper evaluation of the gains this review will bring to our company and our esteemed customers. We are certain this review will enable us to improve electricity supply, provide better services, improve infrastructure in our substations, metering and so much more,” she said.

Also, the Secretary and Head of Regulatory Affairs, Yola Electricity Distribution Company, Alhaji Bala Mohammed, had also advocated for an upward review of electricity tariff at a consultative meeting with its consumers.

According to him, an upward review will help sustain the current tempo in electricity generation and distribution.

Mohammed said that the forum was to sensitize consumers on the challenges they were facing in distributing electricity to consumers.

“We are glad that electricity supply has improved in recent times but adequate tariffs must be paid to sustain the current tempo,” he said.

Consumers Reactions

Responding, the Chairman, Ikeja Branch of the Manufacturers Association of Nigeria (MAN), Mr. Ambrose Uche, said that it was wrong for MAN to discuss tariff review because the case was in court. Uche said that tariff discussion was a no go area for now.

The Chairman, Consumers Protection Forum, Ms Sola Salako, said consumers had suffered in the hands of DISCOs.

Salako said that although the investors were in business to make money, they should balance the equation, urging the consumers to face the reality that power was no longer in government’s hand.

“As a consumer, you have the right to be served electricity and also pay for what you consumed. You must understand the service and get accurate information so that you can enjoy the service better.

“But it is wrong for consumers to be paying for the company’s inefficiency.

“As long as some consumers are not paying for energy consumption, consumers that pay monthly bill will always complain,” she said.

The Chairman, Community Development Committee, Ikorodu, Mr. Laja Martins, said that consumers had a role to play in determining tariff reveiw.

Martins urged consumers to use energy saving bulb to reduce their energy consumption, while also urging the company to device a system that will ensure the change in their obsolete transformers and cables.

Also, the Chairman, CDC Oshodi, Mr. Joseph Bayonle, urged IE to block all the loopholes within the company, saying that the company should warn its staff from illegal collection from consumers.

He also urged them to go back and perfect their homework before calling for tariff review.

Also, Chairman of the Nigeria Labour Congress in Yobe, Alhaji Lawan Ibrahim, said the call for increase in electricity tariff by the Yola Electricity Distribution Company was unjustifiable, noted that even the current tariff needed to be reviewed downward.

He advised the company to place emphasis on the provision of prepaid meters to customers, instead of advocating for increase in tariff.

According to him, the prepaid meters will enable customers pay for exactly what they consume.

The Emir of Fika and chairman Yobe Council of Chiefs, Alhaji Muhammadu Abbali, urged electricity consumers in the state to pay their bills regularly.

Represented by Alhaji Baba Hardo, the emir also advised the electricity company to take measures against its employees who encouraged corruption in the system.