Timing
of tariff increase
The main argument against
the increase centres on inadequacy of power supply. Consumers clamour for
improvement in supply situation before any tariff increase. The argument is not
new; it is as old as the reform process and it held sway for some time
especially under former President, Chief
Olusegun Obasanjo. Erstwhile President, Dr. Goodluck Johnathan, under whose tenure the new tariffs were
approved held back on the implementation because of last year’s general
elections; clearly it would have been a suicidal political action in an
election year.
Tying tariff increase to
improvement in power supply is akin to the age-old riddle of the chicken and
egg, which comes first? The argument held sway for as long as the sector was
owned, managed and funded by government. Government businesses are hardly meant
to be profitable especially when provision of critical infrastructure is
involved. We must recognise the fact that the game has changed; government is
no longer in control; its involvement is minimal – policy formulation and
regulation. The regulatory role involves protection of customers’ rights
wherein falls tariff review and adjustment.
Aside from other factors,
currency exchange rate is a major parameter of the electricity tariffs. Within
the last 15 months, the Naira has lost about 50% of its value! The new owners
of the GENCOs and DISCOs are still saddled with heavy $ denominated loans with
which they funded their acquisitions. A good proportion of their maintenance
costs is sourced externally. Unbeknown to consumers is the fact that some of
the DISCOs can barely pay salaries, talkless of procuring items like
transformers. Many of them complain of “funding gap” because the old tariffs
were not economical. Given such a scenario, one wonders how improvement in
service delivery can be achieved. If the timing is wrong now, when will it be
right?
Billing
issues
Consumers complain of being
charged for electricity they do not consume. There are those who go for months
without supply and yet they receive bills every month, thanks to inherited
arm-chair tactics of almighty NEPA/PHCN which found it convenient to send estimated
bills ad infinitum. New brooms are supposed to sweep cleaner. The DISCOs have
failed in this regards, they ought to pay more attention to customer
satisfaction. If properly handled, estimated billing is not a bad practice so
long as it is based on customer’s historical consumption ad interim while
meters are read on quarterly basis and adjustments made where necessary. Having
seen the system grossly abused for so long, there is absolutely no reason to
allow its continuation. NERC must set a deadline for its cessation.
We must not gloss over the
fact that the customers have won the day as far as fixed charges are concerned!
One hopes that this will assure them that NERC is not insensitive to their
complaints.
Magnitude
of tariff increase
NERC has a template for
determining cost-reflective tariffs. Throughout the NEPA/PHCN years, the
tariffs were not cost-reflective; the government dished out generous
subventions to the parastatal even though the latter still complained of
inadequate funding. The situation has changed; there is no big brother to
bankroll the private sector operators who must survive on their revenues.
Hence, survival is the name of the game! If the sector is cash-strapped, we,
the consumers, will suffer the consequences. We will rely more and more on
generators and, before you know it, our conspiracy theory will lay the blame on
the doorstep of generator merchants!
Rhetoric apart, what we
should be asking ourselves is whether the tariffs are outrageous or not. Since
the alternative supply is own generation, a cursory look at the cost of running
generators is elucidatory. The commonest form of generators for homes and small
businesses uses petrol driven engines. The table below shows just how much we
spend on fuelling alone without having to conjecture depreciation and
maintenance costs. An R1 rated consumer using a 1 KVA petrol generator will
spend about N3,600.00 on fuelling alone as against a DISCO bill of N200.00. In
the same vein, an R2 consumer running a 5 KVA petrol generator will spend as
much as N 11,750.00 on fuelling as against N4,000.00 DISCO bill for 200 KWh.
Those who run diesel generators spend less on fuelling (N6,300 for 200 kWh) but
the outlay on depreciation and maintenance is more than that of his counterpart
running a petrol generator.
The Honourable Minister of
Power, Works and Housing, Barrister
Babatunde Raji Fashola (SAN), has made a passionate appeal to NLC to allow
the increases to stay for the sector’s survival sake. Recourse to own
generation is not an economical option; some consumers unwittingly spend thrice
as much as what they condemn now. We can only say that NLC should live to fight
another day! (Guardian)
No comments:
Post a Comment