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Thursday, 25 July 2013

Amadi and fraudulent electricity tariff increases


Chairman, Nigerian Electricity Regulatory Commission, Mr. Sam Amadi
ASIDE from ensuring that the quality of service delivered to the helpless public remains perpetually poor, one other thing Nigerian electricity providers have perfected over the years is the habit of foisting on consumers regular and unjustifiable tariff increases. The latest increase has taken the form of what has been described as “fixed charge.” This new tariff makes it mandatory for electricity consumers to pay between N700 and N800 monthly – up from N500 – regardless of whether the consumer makes use of electricity for the period or not.
Unfortunately for longsuffering Nigerians, help does not seem to be forthcoming from anywhere, as the National Electricity Regulatory Commission boss, Sam Amadi, has already given his blessing to the increase. In his candid opinion, “the tariff must increase despite shortfalls in service delivery.” This line of thought is not only whimsical, it is downright fraudulent. It is perhaps only in Nigeria that a democratically-elected government or its agents take pleasure in inflicting needless pains on citizens.
Ever since the government woke up to the realisation that inadequate power supply was at the root of Nigeria’s economic woes and came up with the idea of privatising its hopelessly corrupt and inept power monopoly, the Power Holding Company of Nigeria, the only impact Nigerians have felt has been in regular price hikes. Quite strangely, the government believes that the units of the company could only be attractive to buyers if its tariff regime is astronomically raised.
This is an argument that is totally flawed and without any foundation in logic. It could only have been driven by corruption and the need to continue to hold on to the sick company years after it had been split into 18 units, preparatory to its sale to interested private sector investors. Since the government made its intentions known, interested buyers have never been in short supply. Why not sell the units and allow the new investors to fix their tariff based on market forces?
But in order to keep faith with the privatisation process, the then (President) Olusegun Obasanjo administration bowed to pressure from NERC and approved the price increase, effective from 2008, under an arrangement called the Multi-Year Tariff Order. Since then, there has been no year that consumers of electricity have not been called upon to cough up more for increasingly lower quality of service. There has been no end to consumers’ agony.
Under MYTO, the government is supposed to subsidise the cost of electricity; but over a period of time, this subsidy would be gradually phased out while consumers would then be made to pay what should be decided as the appropriate price. It was also assumed that over the period that the subsidy would be eliminated, power supply would have been improved upon substantially, so that increased payment would go hand-in-hand with improved supply. For this reason, an initial amount of N110 billion was set aside by the government for disbursement through the Central Bank of Nigeria. 
Although MYTO was intended to be an intrinsic part of the privatisation of the public power sector, the process witnessed a setback when the late President Umaru Yar’Adua assumed office and promptly halted the privatisation of the PHCN. This, however, did not stop the price increases, which, to consumers, have taken the form of “crazy bills,” a form of arbitrariness in billing that has seen customers sometimes paying increases of up to 500 per cent at a time. It is believed that PHCN officials are given targets, which can only be met by arbitrary billings. They are also promised bonuses, should they exceed the oppressive targets.
With such an easy and fraudulent way of making money, coupled with the inflow of the so-called fixed charges, there is certainly no incentive for improved service delivery. Prepaid metering, which could have cushioned the consumers against this unbridled rip-off, seems to have been completely abandoned, thus leaving consumers in the lurch.
While the government has continuously pumped huge sums of money into the power sector, there has been very little to show for it. The Minister of Power, Chinedu Nebo, said recently that Nigeria had spent about $3.5 billion annually on power in the last 10 years. This no doubt has been money down the drain. For a country of over 160 million people with a potentially huge industrial base, the best in terms of output by the PHCN has been 4,349 megawatts recorded shortly before Christmas last year. While Nigeria has about four times the population of South Africa, it has just one-tenth of the electricity generation capacity of that country.
Plagued by outdated equipment and lack of adequate transmission capacity, power supply is often affected by frequent system failures. There are times that power supply levels have fallen to between 1,000 and 1,500 megawatts. Until recently, President Goodluck Jonathan was going round the world to sing the praises of his administration’s phantom improvement in electricity supply. In an interview with the Cable News Network earlier in the year, he boasted of some “steady gains (that) are crystallising in areas such as power, education and rail transport.”
For a President that came to power on the promise to improve power supply, the situation is very depressing. The famous road map for power is yet to be fully implemented two years after it was supposed to have come into operation.
Now that the unbundled components have been finally sold, why is the take-over by the new owners taking eternity to be effected? And why is Amadi’s NERC concerned about fixing new tariffs? On whose behalf is the tariff being fixed? If the government hopes to ensure that the privatisation is not reversed by the next government, the time to consummate it is now.

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