Nigeria electricity consumers will pay about N1.52 trillion for power next year, going by the recent tariff increase approved by the Federal Government, investigations have shown.
This is about N600 billion higher than the estimated N900 billion which the electricity distribution companies are expected to make this year.
The proposal will rates by an average 27% for some users.
But the Nigerian government must give up its holding rights control on the power transmission networks to attract private investors into the power scene, said Cheta Nwanze, an analyst at Lagos-based business advisory service SBM Intelligence.
The PUNCH had exclusively reported that the Federal Government, through the Nigerian Electricity Regulatory Commission, had approved an increase in the tariff payable by power consumers across the country.
Findings by one of our correspondents from various documents obtained from the NERC showed that from next year, consumers would have to pay an additional sum of between N8 and N14 for every kilowatt-hour of energy.
More figures obtained from the commission’s headquarters in Abuja during the week showed that the 11 power distribution companies in Nigeria would receive increased quantum of energy in 2020.
Since not all power delivered to the Discos is distributed to end users, by adding the lowest tariff increase of N8/kWh to the current 2019 tariff of each Disco and multiplying same with the quantum of energy to be delivered to the Disco in 2020, it was established that power users would pay more next year.
For Abuja Disco, the end-user allowed tariff from 2017 to 2019 per kWh, as approved by the NERC, was N32.66 in each of the years, while those of 2020 and 2021 were put at N42.46 and N44.21.
Abuja Disco has been allocated 4,489GWh of power in 2020. Payments for tariffs are made in Naira per kilowatt-hour.
When converted to kWh, 4,489GWh will be 4,489,000,000kWh.
Since the Disco will likely not distribute all the power it gets, a summation of the lowest tariff increase of N8 with the Disco’s 2019 tariff of N32.66 gives N42.46.
When this is multiplied by the quantum of power which the Disco has been allocated in 2020, it indicates that customers of the AEDC will pay about N182.5bn for electricity by next year.
For Benin Disco, the end-user allowed tariff from 2017 to 2019 per kWh was N32.50 in each of the years, while those of 2020 and 2021 were put at N42.25 and N43.79.
NERC has allocated 3,513GWh to Benin Disco in 2020 and when the lowest tariff increase of N8 is added to the current tariff, N32.5, of this power firm, it gives N40.5.
Going by the earlier method of calculation applied for Abuja Disco, consumers of power under the franchise areas of Benin Disco are expected to pay about N142.28bn by next year.
For Eko Disco, the commission said the end-user allowed tariff from 2017 to 2019 per kWh was N28.3 in each of the years, while those of 2020 and 2021 were put at N36.8 and N39.2.
Eko Disco will get 4,294GWh of power next year and consumers of power being served by the firm will pay about N155.87bn in 2020, going by the earlier method used for the Abuja Disco.
Our correspondent observed that for Enugu Disco, the allowed end-user tariffs for 2019, 2020 and 2021 per kWh are N35.3, N45.9 and N41.6, respectively.
Enugu Disco has been allocated 3,513GWh. Still based on the established method of calculation, consumers of the power firm will pay about N152.1bn in 2020.
For residents who are served by the Ibadan Disco, the end-user allowed tariffs for 2019, 2020 and 2021 per kWh are N30.6, N39.7 and N44.2 respectively.
Ibadan Disco is to get 5,075GWh of power next year and going by the earlier established methods of calculation, customers of the Disco will pay about N195.89bn.
In Ikeja Disco’s franchise areas, the end-user allowed tariffs in the order from NERC for 2019, 2020 and 2021 per kWh were put at N27.3, N35.5 and N37.1 respectively.
Ikeja Disco’s allocation of energy for 2020 is 5,855GWh and the projected amount which its customers will pay next year for electricity supplied by the Disco, based on calculations applied earlier, is about N206.68bn.
For Jos Disco, consumers under this power firm will have to pay N43.9/kWh, as against N33.8/kWh which they currently pay.
Jos Disco got an allocation of 2,147GWh for 2020 and its customers will pay about N89.7bn as power tariff next year, based on our established methods of calculation.
For Kaduna Disco, the end-user allowed tariffs for 2019, 2020 and 2019 per kWh, as captured by NERC, are N30.3, N39.3 and N41.7 respectively.
This power firm will get 3,123GWh of energy next year and its customers will pay about N119.6bn in 2020, based on the established findings and calculations.
Also, for Kano Disco, NERC increased the end-user allowed tariffs from N30.1/kWh in 2019 to N44.7/kWh in 2020 and N41.8/kWh in 2021.
Kano Disco has been allocated 3,123GWh of energy next year and customers here will pay about N118.98bn for electricity in 2020, based on the established methods of calculation.
The tariff for Port Harcourt Disco increased from N33.8 in 2019 to N44.0 in 2020 and the power firm has been allocated 2,573GWh of energy by next year.
Its customers will pay about N106.04bn for electricity supplied to them by next year, based on findings.
Finally, Yola Disco also saw an increase in tariff from N26.8 in 2019 to N34.9 in 2020.
The energy allocation for Yola Disco in 2020 is 1,366GWh and customers served by the power firm will pay about N47.54bn, going by our established method of calculation.
The summation of what consumers of power of the 11 Discos will pay next year gives a total of about N1.52tn.
Energy increase for Discos
It was observed that there was an increase in the quantum of energy to be delivered to each Disco in 2020, when compared to what has been allocated to them in 2019.
Further findings from the NERC on the individual quantum of energy to be delivered to each particular Disco in 2020 showed that Abuja, Benin, Eko, Enugu, Ibadan and Ikeja Discos would receive 4,489GWh, 3,513GWh, 4,294GWh, 3,513GWh, 5,075GWh and 5,855GWh respectively.
These were in contrast to the 3,398GWh, 2,659GWh, 3,250GWh, 2,659GWh, 3,841GWh and 4,432GWh captured as power being delivered to the six Discos in their respective order in 2019.
In 2019, Jos, Kaduna, Kano, Port Harcourt and Yola Discos got 1,625GWh, 2,364GWh, 2,364GWh, 1,920GWh and 1,034GWh as the energy being delivered to them respectively.
The quantum of energy allocated to each of the five Discos in 2020 increased to 2,147GWh, 3,123GWh, 3,123GWh, 2,537GWh and 1,366GWh respectively.
The 39,035GWh that is allocated to the Discos in 2020 is 9,489GWh higher than the 29,546GWh which the firms are getting in 2019.
When contacted to state the quantum of power distributed by their respective Discos, the spokespersons for each of the 11 distribution companies gave different explanations.
John Onyi of Port Harcourt Disco said, “We have an installed capacity of 1,393.7MW and the average allocation that we get on a daily basis is between 250MW and 330MW. So when you calculate that in weeks, months and year, then you may know the annual figure.”
For Yola Disco, the spokesperson, Kingsley Nkemneme, said, “In most cases, we get between 140MW and 150MW daily. And that is what we distribute on the average every day.”
The Head of Communications, Enugu Disco, Emeka Ezeh, said nine per cent of whatever was generated across the country was what Enugu Disco normally got and distributed to its customers.
He said, “The generation as at 00:24 hours of 31/08/2019 was 4,593.1MW and EEDC’s (Enugu Electricity Distribution Company’s) allocation was 438.38MW. We get nine per cent of total energy generated and that is what we distribute across the five states we cover.”
The spokesperson, Eko Disco, Godwin Idemudia, said the allocation for the Lagos-based power distribution firm was between 550MW and 590MW daily and the firm distributed around the figure.
For Abuja Disco, the spokesperson, Oyebode Fadipe, said in a text message, “This is a 2020 issue. Being so, it certainly will be a projection and that will be based on data from the past intake. I will need to consult extant records to see the data and also confer with the relevant desks on it.”
Benin Disco’s spokesperson, Adekunke Tayo, requested that a message on the enquiry be sent to him in order to get a more accurate response. This was done, but he had yet to respond as of the time of publishing this report.
Also, the spokesperson for Ibadan Disco, Busolami Tunwase, requested that a text message be sent to her and that she would get back to one of our correspondents on Monday.
A similar request was made by the spokesperson for Kano Disco, Ibrahim Sani, and a message on the required information was also sent to him.
For Ikeja Disco, the spokesperson, Felix Ofulue, said he was out of his station and would not be able to provide the required data when contacted. He promised to do so but did not do so as of the time of filing this report.
Jos Disco also promised to revert after demanding that a message be sent on what the enquiry was about.
Kaduna Disco could not be reached, as the mobile telephone of its spokesperson, Abdulazeez Abdullahi, was switched off.
Power consumers kick
Power consumers, however, are not pleased with the increase in tariffs, as they told our correspondents that the regulator failed to consult widely before approving the new rates.
Different groups that represent power consumers across the country declared that tariff increase would not stand until there was a considerable improvement in power supply.
The Nigeria Electricity Consumers Advocacy Network and the Electricity Consumers Association of Nigeria questioned why the power sector regulator would increase tariff at a time when power delivery was still poor.
In separate interviews with one of our correspondents, the Chairman, NECAN, Tomi Akingbogun, and the President, ECAN, Chijioke James, stated that it would be unfair for consumers to pay higher tariffs when service delivery by power distributors had yet to improve.
James said, “The commission did not consult with us. There is a framework for price review and it entails the process of consultations with those you intend to serve and your potential clients.
“The Nigerian consumers are not very difficult people and so we need to know why you (NERC) will want to increase tariff when the services are not really there. That cannot be tolerated.”
The ECAN president noted that the commission would be increasing the financial burden of the poor masses, as the incomes of most of them would not sustain such tariffs.
James said, “You don’t increase the tariffs of people whose incomes cannot sustain the payment of your new tariffs. So, there must be some mechanism to accommodate low-income earners. However, the fact is that as far as there is no reliable power, there will be no tariff increase.”
On his part, Akingbogun stated that consumers were not carried along by the regulator, as required in the standard practice before the announcement of new tariffs.
He said, “The first thing I’ll say is that consultation was not properly done before the announcement and for us, the details are just rolling out bit by bit.
“We first got to know about it by reading it in the paper and one thing for sure is that consultation with the private sector was not properly done.”
We’ll mobilise Nigerians against tariff increase – NLC, TUC
Reacting to the tariff increase, the General Secretary of the Nigeria Labour Congress, Emma Ugboaja, said the union would mobilise Nigerians against the proposed increase in tariff.
He said, “The NLC will mobilise Nigerians against the increase in electricity tariff because that is not the way to go. There are still issues that need to be resolved; hiking the cost of electricity is not the best because electricity is still one of the products that have yet to get to the ordinary people.
“We cannot be talking about the challenges of rural-urban migration when we are hiking tariffs and we want people to remain to have more cottage industries and more entrepreneurial capacities. You can’t want that to thrive and at the same time be making electricity not to be accessible.
“You can’t be struggling to pay N30, 000 minimum wage per worker and yet expect the workers to spend the whole money on electricity.”
Similarly, the Secretary-General of the Trade Union Congress, Musa-Lawal Ozigi, said NERC should not encourage inefficiency in the Discos.
He said, “The NERC should not encourage inefficiency by approving higher tariff because the Discos do not collect the billed revenue for the current tariff. That is, they have very low collection efficiency.
“Increase in tariff means passing the low-efficiency loss to the customers. If collection efficiency is high enough, it will help reduce the gap in the cost of delivering electricity and reduce the need for higher tariff or make the increase minimal.”
Tariff increment not solution to electricity problem –MAN
The Manufacturers Association of Nigeria has kicked against the planned increment of electricity tariff.
The President of MAN, Mansur Ahmed, who spoke to SUNDAY PUNCH in Lagos on Saturday, said increasing electricity tariff without any improvement in supply would have negative effects on the manufacturing sector.
He said manufacturers were already subsidising.
Ahmed also stated that the Discos needed to build capacity to deliver and operators at that level should also have enough resources to be more effective.
He said, “We are still waiting for clarifications from the NERC on the tariff increment. The manufacturing sector is unhappy with the power situation in the country both in terms of availability and quantum and the price.
“The industrial consumers are already the ones paying the highest rate and subsidising other consumers. So, to continue to increase the tariff when neither the quantum nor the quality of electricity supply has improved is not fair to the manufacturing and industrial sectors.
“We do understand that the power sector is in a very difficult situation and a lot needs to be done to firm things up. It goes beyond just increasing tariff. The sector needs to be completely restructured and overhauled. They should ensure that proper capacity is built and the private operators, especially at the distribution level, must have the capacity and resources to run this sector properly.
“That really goes beyond just throwing money into the sector. Already, the government has invested hugely in terms of capital and interventions. Over a trillion naira has been thrown into this sector with very little improvement to show for it.
“Increasing tariff and injecting funds into the system is not the solution that will get us out of this situation. In the manufacturing sector, electricity is one of the most critical inputs.
“There is no way our products can be competitive if we have to cope with this kind of energy supply and the cost of it. Clearly, we cannot continue to do what we have been doing all over again. Something drastic must be done to change the situation.
“It should not be business as usual again. A very radical solution must be found to get us out of here. But we are still discussing with the regulatory body about this tariff increment.”
FG should ask power firms to recapitalise –Expert
Meanwhile, the Registrar, Chartered Institute of Finance and Control of Nigeria, Mr Godwin Eohoi, has called on the Federal Government to recapitalise power firms to enable them to deliver on their mandate.
He said almost five years after the privatisation of the power sector, consumers had yet to feel the positive impact of the exercise as many of them were still being subjected to arbitrary charges.
He said, “After the privatisation of the defunct Power Holding Company of Nigeria, the government retained control of the transmission aspect through the Transmission Company of Nigeria, while generation and distribution aspects were privatised, with the private sector having controlling shares.
“At present, the weakest link in the value chain is distribution, which is evidently bedevilled by inefficiency, poor revenue collection and weak capital.
“Most of the distribution companies have yet to invest in metering that will help them improve on the revenue collection capacity.
“If the Discos do not presently have capital to invest in transformers, meters, government, which is the 40 per cent owner of the Discos should simply call for recapitalisation and dilute the private sector interest in the first instance as a stop-gap while subsequently privatising its majority interest to investors with proven financial capacity to invest long term.” Culled from Punch.