Electricity Tariff Hike: Senate Insists On Reversal
CHUKWU DAVID writes on Senate’s reaction to the recent increase in electricity tariff by the Nigerian Electricity Regulatory Commission (NERC), contrary to its resolution on February 21 for the Commission to halt the increment
On February 21, 20224, the Senate unanimously passed a resolution, asking the Federal Government to halt the then planned increase in electricity tariff through proposed removal of electricity subsidy. The Red 1 Chamber was prompted to pass the resolution, following the adoption of a motion on “planned increase in electricity tariff and arbitrary billing of unmetered customers by Distribution Companies (DisCos)”.
The motion, which was brought under matter of urgent public importance, was sponsored by Senator Aminu Abbas, representing Adamawa Central on the platform of the Peoples Democratic Party (PDP) and co-sponsored by other senators.
The apex legislative Assembly also mandated its Committee on Power to investigate the over N2 trillion subsidy requirements as stated by the Minister of Power to avoid a repeat of fuel subsidy scenario.
The Senate further mandated the committee to investigate the statement made by the minister with regards to the N1.3 trillion the ministry was owing GenCos and N1.3 billion dollars owed to gas companies.
Moreover, it urged the committee to investigate the role of Ministry of Power, NERC and Ziglaks Company on their roles in the failed agreement to provide prepaid meters and ensure Nigeria is not shortchanged, while urging the committee to engage the NERC to come up with lasting solution to the energy billing system in the country and other related issues.
The chamber urged the committee to find out the truth of the matter on the issue of Federal Government’s directive and release of funds for mass prepaid metering and report findings to the Senate.
It also urged the committee to enforce and ensure judicious utilisation of the N10.5 billion penalty imposed on DISCOs.
It also called for investigation of the operations of DisCos to ascertain current status of metering and their extent of compliance with relevant legal and regulatory frameworks in service delivery and also directed NERC to furnish the committee with any relevant documents on metering of electricity consumers, post privatisation requirements for operation of the DisCos and evidence of regulatory actions taken to ensure statutory compliance by the DisCos.
The Senate also directed NERC to ensure implementation of energy caps by all DisCos to unmetered customers in the country while directing its Committee to submit a comprehensive report for further legislative action.
The motion
Presenting the motion Abbas, said that it is worrisome to hear of the plan to increase electricity tariff by the relevant statutory authority, arguing that if implemented, the decision was in disregard of increased economic challenges, with attendant widespread poverty and high cost of living in Nigeria.
He said that arbitrary energy charges on unmetered customers had become worrisome, given a February 2024 report by NERC on non-compliance with energy billing caps by the DisCos and penalty of N10.5 billion imposed on the DisCos that overbilled its unmetered customers.
Abass recalled that in 2020, then President Muhammadu Buhari ordered NERC to commence mass prepaid metering to end estimated billing, saying that funds were released to that effect.
He expressed reservation that in addition to the high cost of living being experienced in the country, the unmetered customers who are owners of small and medium enterprises were adversely impacted by the level of exorbitant electricity charges and by implication have their businesses affected.
Senator Orji Uzor Kalu in his contribution pointed out that all over the world, government pays subsidy on essential food and social amenities and insisted that the federal and state governments should subsidize some essential commodities for Nigeria.
Similarly, Senators Abba Moro, Aminu Tambuwal and Onyekachi Nwebonyi supported the motion, kicking against increase in tariff or removal of electricity subsidy. Also, speaking on the electricity tariff increase, the senator representing Ebonyi South Senatorial District, Anthony Ani, lamented that the outrageous increase in the electricity tariff by the NERC has worsened the hardship faced by Nigerians.
Senator Ani, who called on the regulatory commission to immediately reverse the increase and save Nigerians from additional hardship the action imposed on them, noting that most Nigerians are finding it difficult to feed properly, following the harsh economic situation in the land.
He wondered why NERC should aggravate the pathetic condition of the citizens through the increase in electricity tariff. He maintained that since the Senate had earlier rejected the proposed hike in electricity tariff, when the matter was brought to its floor as a motion, the regulatory authority shouldn’t have gone ahead with the increase.
The lawmaker also expressed concern that the issue of new minimum wage has not been addressed by the government, arguing that if workers had been given reasonable minimum wage, it would have been easier for them to absorb the shocks caused by the increment in the electricity tariff.
Minister disagrees with Senate
Meanwhile, there was disagreement between members of the Senate and the Minister of Power, Adebayo Adelabu at the National Assembly Complex, on Monday, April 29, over the hike in electricity tariff. While the minister made effort to convince the Senate on the need for the removal of electricity subsidy, which now reflected in the high cost billing of consumers grouped under Band A, the lawmakers insisted that the increase must be reversed, lamenting that the increase is injurious to the people.
The lawmakers maintained that the action of the ministry is tantamount to “robbing Peter to pay Paul” and forcing Nigerians to pay for the inefficiency of operators of the sector. In his persuasive campaign, Adelabu said: “For this sector to be revived, government needs to spend nothing less than $10 billion annually in the next 10 years.
This is because of the infrastructure requirement for the stability of the sector, but government cannot afford that, so we must make this sector attractive to investors and to lenders.”
He added: “So, for us to attract investors and investment, we must make the sector attractive, and the only way it can be made attractive is that there must be commercial pricing. If the value is still at N66 and government is not paying subsidy, the investors will not come.
But now that we have increased tariff for Band A, there are interest been shown by investors.” He pointed out that the major challenge of the sector is absence of liquidity, saying that the sector has been operating on a subsidised tariff regime given the absence of a cost reflective tariff. Adelabu, however, said that the subsidy had not been funded over the years as huge liabilities is been owed the Generating Companies (GenCos) and Gas Companies.
According to him, inability of the government to pay outstanding N2.9 trillion subsidy was due to limited resources hence the need to evolve measures to sustain the sector. He therefore, appealed to the lawmakers to support the process of paying the debt owed operators across the value chain of generation, transmission and distribution, explaining that the increase was based on supply, and that any customer that did not receive 20 hours power supply would not be made to pay the new tariff.
He said government is investing in hydroelectric power to improve power supply,, adding that the construction of 700 megawatts power plant in Zungeru had commenced, while Kashimbila Hydroelectric power plant of 40 megawatts is awaiting evacuation to improve generation. The minister also said that there is ongoing investment in 26 small hydropower dams to boost electricity generation across the country.
Public hearing
However, in their separate contributions, members of the Senate Committee on Power decried experiences of Nigerians on electricity supply over the years despite unbundling of the sector.
Vice Chairman of the committee, Senator Lola Ashiru, who said that Nigerians are paying for inefficiency of power sector operators, noted that there was a lot of inefficiency across the value chain of generation, transmission and distribution.
He insisted that poor Nigerians must be protected hence the urgent need to consider a reversal of the tariff increase. Chairman of the committee, Senator Enyinnaya Abaribe said that what Nigerians wanted is a solution to the issues and ways to ensure liquidity in the sector, and also decried the non-appearance of a company “ZIGLAKS” over the failed agreement to provide prepaid meters for Nigerians, alleging that the company had received N32 billion in the last 20 years to meter Nigerian electricity consumers.
Similarly, Senator Adamu Aliero (PDP Kebbi Central), said that due consultation was not made before the tariff increase, stating that the public was not at peace with the increase, and that the increase was over 200 per cent, hence the need for a reversal of the tariff increase.
Other stakeholders that made presentation at the investigative hearing include NERC, Manufacturers Association of Nigeria (MAN), Association of Power Generation (Gencos) and Electricity Distribution Companies (DisCos) among others.
