The Reduction In Electricity Tariff

A few weeks ago, the Federal Government, through the Nigerian Electricity Regulatory Commission, NERC, announced a 50 percent reduction in electricity tariff in the country. This is commendable, but the reduction has created many doubts. The Chairman of NERC, Dr Sam Amadi, in announcing the new tariff, said the decision of the government followed a series of complaints by electricity consumers and that the new tariff came after removing the collection loss component of the Multi Year Tariff Order 2.1 of the affected Distribution Companies. Nigeria currently has 11 of such companies.

The good thing about this reduction is that it would encourage businesses and investors in Nigeria that are suffocating under a struggling economy. Many businesses have had to spend much of their earnings as well as production costs on fuel to power their electricity generating sets.

When, in January, NERC increased the tariff, especially for those categorised as industrial and commercial consumers, all hell was let loose. Many in the sector saw it as killing. They threatened to shut down their businesses and their cry was justified.

The doubts that come with the reduction stem from the suddenness of the decision by a government regulatory agency that had encouraged constant increase in electricity tariff since the electricity distribution companies came into existence without a comensurate service delivery. In spite of the hues and cries, NERC had often justified every of such increase even with very poor electricity supply.

Even with the constant increase, the DISCOs had often complained that they were running at a loss. Some of the companies have said the realities of the challenge in the power sector only dawned on them after they had invested in the sector. No one knows if their complaints have been given any consideration.

Again, while announcing the reduction, Amadi reportedly said the suspended increase in the tariff for residential consumers still remained. This means that consumers should expect an increase in their own tariff even in the face of the complaints and protests over non-availability of power supply. We see the action of NERC as politically motivated and would ask Nigerians not to get carried away.  NERC should explain in details to the people what the reduction is truly about.