Beginning with political interference that disconnected and fragmented the various units in the value chain, inadequate or poorly regulated environment and large public stealing of power all have shredded attempts to firm up the industry.
Only on April 3, 2024 the Nigerian Electricity Regulatory Commission, NERC, announced a hike in electricity tariff for customers enjoying 20 hours power supply daily.
Customers in this category are said to be under the Band A classification.
The increase saw the customers paying N225 kilowatt per hour from the current N66, a development that has been heavily criticised by many Nigerians, considering the immediacy of the tariff hike and the current hardship in the land.
The federal government calculate that the hike would save N1.5 trillion from subsidy payment.
The government stated that the decision took effect from April 3, 2024, adding that Band A customers would enjoy up to 20 hours of power supply daily.
However, the House of Representatives, organised labour and the Nigerian Bar Association kicked against the hike in tariff payable by about 1.9 million consumers.
The House of Representatives called on the NERC to suspend forthwith the implementation of the new electricity tariff nationwide, while organised labour issued a two-week ultimatum demanding the reversal of the tariff hike.
The minister of power, Adebayo Adelabu defended the increase during an investigative hearing held by the Senate Committee on Power, insisting that there would be a nationwide blackout in the next three months if the increase in electricity tariff was not implemented.
Also, spokesperson for the power ministry, Florence Eke, was reported to have stressed that the new tariff had come to stay and the government would not yield to public pressure.
However, 24 hours after Eke’s assertion that the tariff hike would not be reversed, the NERC in a statement announcing the eight per cent reduction for band A customers said this was a result of changes in macroeconomic indices in April, especially the appreciation of the naira against the dollar in the foreign exchange market.
Pursuant to the tariff methodology adopted by the Nigerian Electricity Regulatory Commission, NERC, a revised tariff order covering the month of May 2024 has been issued by the Commission to the eleven (11) Electricity Distribution Companies, DisCos
Information received by NATIONAL ECONOMY from DisCos, indicates that the affected companies have commenced implementation of the adjusted tariff which has been reduced from N225 for Band A customers to N206 per kilowatt hour.
Most DisCos, like Ikeja Electric Distribution Company (IE) and Eko Electricity Distribution Company, EKEDC, have adjusted their tariff for customers under Band A from N225/kWh to N206.80/kWh.
In a circular signed by the management of the companies on Monday, said the customers will now pay N206.80/kwh, rather than the stipulated N225/kwh ordered by the Nigeria Electricity Regulatory Commission (NERC).
The DisCos also assured to provide 20 to 24 hours of electricity to users under this Band, adding that the tariff for customers under other categories will remain the same.
“Please be informed of the downward tariff review of our Band A feeders from N225/kwh to N206.80/kwh effective 6th May 2024 with guaranteed availability of 20-24hrs supply daily.The tariff for Bands B, C, D, and E remains unchanged” IE said .
The EKEDC also confirmed the change in a similar statement to customers.
Also Kano Electricity Distribution Company confirmed that it has adjusted to the new order.
Spokesman of the Kano Disco Sani Baba, said the company has fully complied.
The Commission explained that it considered changes in the macroeconomic parameters over the preceding month of April 2024 and especially the appreciation of exchange rates – consequently the Commission has approved a downward review of end-user tariffs for Band “A” customers from NGN225/kWh to NGN206.8/kWh.
The Commission reaffirms its commitment to providing a balanced and effective regulatory regime serving the needs of the Nigerian Electricity Supply Industry.
According to the statement from IE, there are also additional feeders of Band A that have been added to its network.
It said this is driven by the firm’s capability to maintain at least 20 hours of daily availability during a performance evaluation period overseen by the Nigerian Electricity Regulatory Commission (NERC).
The regions Incorporated into Band A of Disco’s network are classified under the 11KV and 133KV Band A category, covering areas in Ikorodu, Magodo, Maryland, Magodo, Ilupeju, Ejigbo, and additional locations.
IE further noted that the approved Band A feeders are now stands at 104.
“Premised on our demonstrated ability to consistently provide a minimum of 20 hours of daily availability during a performance evaluation period monitored by the Regulator, we are pleased to announce that we have obtained approval to add 19 additional Band A feeders to our network,” the statement reads
Swiftly same Monday a greater number of Nigerians rejected the Commission’s reduction of the tariff payable by Band A customers from N225/kWh to N206.8/kWh.
The Nigeria Labour Congress, Trade Union Congress, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, electricity consumers and civil society organisations, demanded a reversal of the hike to the subsidy era tariff.
There is need to close the clear gaps existing in the metro middle- and last-mile segments of the connectivity value chain
Subsidy on electricity was withdrawn completely from the tariff of consumers in the Band A category, which constitutes about 15 per cent of the total 12.82 million power consumers across the country.
The commission noted that the decision came after a thorough review of the macroeconomic parameters and exchange rate appreciations.
In a strong opposition the Nigeria Labour Congress, NLC, and its Trade Union Congress of Nigeria, TUC, counterpart, insisted the NERC withdraws the recent hike in electricity tariff or face unprecedented industrial action.
The ultimatum was issued in a joint letter to the Chairman/Chief Executive Officer, CEO, dated May 3, 2024, and copied to the Secretary to the Government of the Federation, SGF, the Ministers of Labour and Power and the electricity distribution companies, DisCos, among others, Joe Ajaero and Festus Osifo, President of NLC and its TUC’s counterpart.
The letter read: “This is to refer you to our May Day address where we expressed grave concerns regarding the recent announcement of an astronomical hike in electricity tariff across the nation from N65/kWh to N225/Kwh by your commission.
“We believe that this decision is not just morally reprehensible considering the difficulties Nigerians are faced with currently, but it blatantly disregards fundamental principles and statutory obligations.
“It is a slap in the face of justice and fairness, and we will not stand idly by as the masses and workers are subjected to such unacceptable exploitation.
“As the regulator of the electricity sector, it is imperative that your commission grasps the weight of its responsibilities.
“NERC’s entails the regulation of electricity tariffs in the country, a duty outlined in explicit detail within the statutes governing the commission.
“Yet, with this recent tariff hike which you have acquiesced, it is evident that the Commission has forsaken its duty and abandoned the people it was meant to protect to the fat cats in the electricity industry.
“We are miffed that NERC has become a tacit collaborator in crafting the oppressive pricing regime being perpetuated against Nigerian workers and people. The Laws that set up the commission mandate it to act as an unbiased ombudsman in the electricity industry. “Unfortunately, the reverse is the case as it has acted in cahoots with the Distribution Companies, DisCos and the Generating Companies, GenCos, to promote their nefarious market practices.”
“The announced tariff hike not only defies the established procedure mandated by law but also tramples upon the rights of Nigerian citizens. It is a flagrant abuse of power and a clear violation of the trust bestowed upon your commission by the Nigerian people. Such actions will not be tolerated, and we refuse to accept them as the new norm.
“Nigerian workers and masses led by the Nigeria Labour Congress, NLC, and the Trade Union Congress of Nigeria, TUC, stand united in denouncing this injustice. We must defend the rights of our fellow citizens against exploitation.
“Therefore, we demand an immediate reversal of the hike in electricity tariff to N65/kwh, immediate cessation of the discriminatory practice of segregating electricity consumers into arbitrary bands, and restoration of the supremacy of the statutes governing the conduct of operators within the electricity industry.
“We give you until Sunday, May 12, 2024, to comply. Failure to do so will result in swift and decisive action on our part as we will not hesitate to mobilize our members and occupy all NERC’s offices and those of the DisCos nationwide until justice is served.”
Persistent Illiquidity Crippling Industry’s Performance
Even with the political tariff mechanism, Electricity Distribution Companies, DisCos are still not performing optimally.
According to records the DisCos billed a total sum of N243.97 billion to their customers in January and February, but were only able to collect N192.27 billion during the period under review.
According to NERC’s data, in January, while DisCos billing was valued at N130.92 billion, they realised N95.26 billion as revenue.
This represented a 72.76 per cent collection efficiency, according to NERC, with the data showing a dip of 0.36 per cent in efficiency compared to the previous month of December.
In January, total energy received was 2,577.6 GWh, while the total energy billed was 2,072.01 GWh, representing a billing efficiency of 80.39 per cent.
In terms of revenue recovery performance, the NERC’s commercial performance data of Discos indicated that allowed average tariff for the month was N59.89/kWh, even as actual average collection was N36.97, indicating a recovery efficiency of 61.73 per cent.
Stakeholders have blamed the illiquidity in the sector, mostly occasioned by shortfalls in billing collection for the thinning investment in the Nigerian power sector and this is even as consumers complain they are over-billed and that they actually pay for ‘darkness’ when they are billed for unreliable power supply, especially those on the estimated billing platform.
The 11 DisCos in the country have also blamed powerful and wealthy Nigerians for being partly responsible for the current illiquidity in the power sector in Nigeria.
The Association of Nigerian Electricity Distributors (ANED), claims that many rich Nigerians bypass their metering devices, even when they have the capacity to pay for the kilowatts they use.
Despite ‘efforts’ by succeeding governments since 1999, Nigeria’s power sector has continued to totter, facing an acute cash shortage, which experts say could lead to its imminent collapse.
Although Nigeria’s power sector has witnessed a 219 per cent increase in liquidity over the past nine years, reaching N900 billion in 2023, from about N282 billion in 2015, Discos have complained this is not enough to trigger a marked developmental shift in the industry.
But in January, the NERC data showed that Ikeja Disco had the highest revenue collection of N17.61 billion, out of N20.13 billion worth of bills sent out to customers, to record a billing efficiency of 87.35 per cent.
This was followed by Eko Disco, which billed N21.24 billion, but was able to collect N16.30 billion, representing a collection efficiency of 76.71 per cent.
Abuja Disco sent power valued at N19.02 billion to its franchise areas, but got N15.55 billion as revenue for the month, showing a collection efficiency of 81.76 per cent.
The Discos with the least revenue collection for the month were Yola, with N1.99 billion, recording a collection efficiency of 43.95 per cent, Kaduna Disco with N3.24 billion and Jos Disco with N3.88 billion total revenue for the month.
However, in February, all the Discos billed N113 billion to customers, but got a total revenue collection of N97.01 billion for the month, implying an overall billing efficiency of 81.83 per cent, and collection efficiency of 85.8 per cent.
The difference between total bill sent out compared to the total collection in January and February this year showed a deficit of 23.7 per cent, meaning that for both months, the DisCos, on the average, were able to fetch 76 per cent of the entire bill sent out.
Revenue collection for the DisCos were also highest among the top three power distributors during the month of February, with Ikeja DisCo collecting N19.58 billion, followed by Abuja with N16.28 billion and Eko DisCo’s N15.71, as the DisCo recorded a very high collection efficiency of 99.24 per cent during the month.
