The increase in cost of electricity from N8.50 to N10 per kilowatt-hour from July 1 has generated ripples across the country. Many people, largely unimpressed with the continuing poor power supply in the country, have queried the justification for increasing tariff at a time that supply of the product is grossly inadequate. In University of Lagos for instance, we have never had the worst of electricity moment than we are having in recent time. The situation is more pathetic in view of the digitization agenda of the current Vice Chancellor.
Meanwhile, the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) have condemned the decision to effect the increase. They told the government to have a rethink on the matter, since the country cannot develop without access to affordable electricity. A couple of years ago, the Manufacturing Association of Nigeria (MAN) reported a couple of companies that left Nigeria due to the incessant power supply but current report about those companies has it that they are doing well in other part of Africa, especially in Ghana.
Although, the Nigerian Electricity Regulatory Commission (NERC), have insisted that the increased price regime is not new as it is only the implementation of rates approved under the Multi-Year Tariff Order (MYTO) in 2008. Yet this is no sufficient excuse. The NERC Chairman, Sam Amadi, said the adjustment of the average cost of electricity is part of the MYTO, which provides for increase in price of electricity every five years. The increase is also in keeping with Section 76 of Electric Power Sector Reform Act 2005 which provides that electricity tariff be auto-adjusted to reflect current cost of gas and general inflation.
Well, the NERC is well within its rights to forge ahead with strict implementation of the MYTO but for an average Nigerian it is like narrating the cooking procedure for a hungry man who unfortunately is an angry man. In fact, pricing is not the critical problem with electricity in Nigeria but adequate supply. Inflationary trends in the economy suggest that an increase in the cost of a kilowatt-hour of electricity by N1.50 in five years is not outrageous. The major problem is that there is no remarkable improvement in the supply of this critical product. The little noticeable improvement in power supply just before the elections fizzled out as soon as the polls were concluded. It is this failure to meet the expectations of the people for regular power supply that makes the idea of an increase in tariff unjustifiable. The challenge before NERC and the authorities, therefore, is to give Nigerians adequate electricity to justify this increase, that was what my teacher taught me about the law of demand and supply in the good old days of secondary school.
Meanwhile, the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) have condemned the decision to effect the increase. They told the government to have a rethink on the matter, since the country cannot develop without access to affordable electricity. A couple of years ago, the Manufacturing Association of Nigeria (MAN) reported a couple of companies that left Nigeria due to the incessant power supply but current report about those companies has it that they are doing well in other part of Africa, especially in Ghana.
Although, the Nigerian Electricity Regulatory Commission (NERC), have insisted that the increased price regime is not new as it is only the implementation of rates approved under the Multi-Year Tariff Order (MYTO) in 2008. Yet this is no sufficient excuse. The NERC Chairman, Sam Amadi, said the adjustment of the average cost of electricity is part of the MYTO, which provides for increase in price of electricity every five years. The increase is also in keeping with Section 76 of Electric Power Sector Reform Act 2005 which provides that electricity tariff be auto-adjusted to reflect current cost of gas and general inflation.
Well, the NERC is well within its rights to forge ahead with strict implementation of the MYTO but for an average Nigerian it is like narrating the cooking procedure for a hungry man who unfortunately is an angry man. In fact, pricing is not the critical problem with electricity in Nigeria but adequate supply. Inflationary trends in the economy suggest that an increase in the cost of a kilowatt-hour of electricity by N1.50 in five years is not outrageous. The major problem is that there is no remarkable improvement in the supply of this critical product. The little noticeable improvement in power supply just before the elections fizzled out as soon as the polls were concluded. It is this failure to meet the expectations of the people for regular power supply that makes the idea of an increase in tariff unjustifiable. The challenge before NERC and the authorities, therefore, is to give Nigerians adequate electricity to justify this increase, that was what my teacher taught me about the law of demand and supply in the good old days of secondary school.
By the way, the MYTO was introduced in 2008 with a terminal date of 2013 to ensure stability in the price of electricity services and to generate more funding for the electric power industry. With the new tariff of N10.00 per kilowatt hour, the NERC envisages that the sector will be able to generate an additional N1.1 trillion annually during the next five years, if the planned implementation of the power sector is followed consistently.
Currently, the industry generates only N400bn a year, a figure grossly inadequate to guarantee the growth of the sector and efficient service delivery to consumers. Thus, from the point of view of the electricity service providers and the regulatory commission, a projected total revenue of N1.5trn annually from the new tariff appears to be the solution to the cash problems of the energy sector.
Unfortunately, the commission has chosen to concentrate on the distribution aspect of a basically three-dimensional problem – generation, transmission and distribution. Even for the distribution component, an increased tariff regime alone is insufficient to address the problem of poor return on investment. Besides, at the inauguration of the MYTO in 2008, there were other components of the phased tariff regime that now appear to have been conveniently ignored. It is baffling that while emphasizing the role of efficient pricing in the distribution chain, the commission failed to address the major issues of electricity generation and transmission. Yet without adequate generation and efficient transmission, distribution will remain epileptic.
It is also unfortunate that so much money has been spent on the power sector with little to show for it. Whatever happened to the probe of trillions of naira allegedly spent on the sector between 1999 and 2007? Without bringing those responsible for misuse of funds appropriated for power projects to book, corruption in the sector will continue to flourish like a tree planted by the riverside.
Over the years, Nigerians have been inundated with information on various efforts by government to improve power supply. All these efforts have up till now not yielded the desired result. Let the president and his team work round the clock to remove every impediment to efficient power supply. There should be regular maintenance of power stations while shortage of gas should be addressed.
In addition, the stations should be made to work at full capacity. Government must be serious about keeping power generation stations in top shape. The authorities should also be decisive in dealing with those who sabotage electricity supply. Let the government wield its powers to effect a change in the sector.
Nigeria must also strive to diversify source of power supply. The technology for wind and solar energy is available. Let it be properly utilised to improve electricity generation.
Another suggestion will be for the government to also encourage Nigerians to use energy saving devices such as low-watt bulbs-as in the case of UNILAG. Let import duty be reduced for such products. There is also need for behavioural change with regard to use of electricity in the country. The people should be enlightened on the need to put off all electrical appliances, including light bulbs, when not in use. Use of pre-paid metres will also reduce power wastage. Unfortunately, the supply of the metres has not been as expected.
Let us not adopt the pay before service method on this matter, the authorities should show Nigerians what we are paying or will be paying for by putting the zeal and efficiency demonstrated in ensuring timely increase in tariff to generation and distribution of the product also. After doing these, then let there be light and there will be... Light
Over the years, Nigerians have been inundated with information on various efforts by government to improve power supply. All these efforts have up till now not yielded the desired result. Let the president and his team work round the clock to remove every impediment to efficient power supply. There should be regular maintenance of power stations while shortage of gas should be addressed.
In addition, the stations should be made to work at full capacity. Government must be serious about keeping power generation stations in top shape. The authorities should also be decisive in dealing with those who sabotage electricity supply. Let the government wield its powers to effect a change in the sector.
Nigeria must also strive to diversify source of power supply. The technology for wind and solar energy is available. Let it be properly utilised to improve electricity generation.
Another suggestion will be for the government to also encourage Nigerians to use energy saving devices such as low-watt bulbs-as in the case of UNILAG. Let import duty be reduced for such products. There is also need for behavioural change with regard to use of electricity in the country. The people should be enlightened on the need to put off all electrical appliances, including light bulbs, when not in use. Use of pre-paid metres will also reduce power wastage. Unfortunately, the supply of the metres has not been as expected.
Let us not adopt the pay before service method on this matter, the authorities should show Nigerians what we are paying or will be paying for by putting the zeal and efficiency demonstrated in ensuring timely increase in tariff to generation and distribution of the product also. After doing these, then let there be light and there will be... Light
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