The electricity tariff hike of July 1 has been suspended and here’s why

Nigeria’s legislative arm of government says it has convinced electricity distribution companies (DisCos) to shelve a planned increase in tariff, slated to kick-off on July 1, 2020. The DisCos have been making the case for a cost reflective tariff, insisting that they are practically running at a loss with the current pricing regime.

In January, the Nigerian Electricity Regulatory Commission (NERC) announced that there would be an upward review of electricity tariff across the country from April 1. In March, NERC asked DisCos to suspend the proposed tariff hike due to the COVID-19 pandemic. Power Minister Sale Mamman and the DisCos would later announce that the new tariff regime would kick off on July 1.

However, during a meeting held with power stakeholders, Senate President Ahmad Lawan and Speaker of the House of Representatives Femi Gbajabiamila insisted that the planned hike couldn’t have come at a worse time for suffering Nigerians. "The agreement here is that there is not going to be any increase in the tariffs on July 1st," Lawan said after the meeting. 

"The Speaker and I, we are going to take appropriate action and meet with the president. We are in agreement here that there is no question on the justification of the increase but the time is simply not right and appropriate measures need to be put in place.”

Lawan said the DisCos were asked to defer the plan to the first quarter of 2021. "So between now and the first quarter of next year, our task will be to work together with you to ensure that we put those blocks in place to support the eventual increase in tariffs," Lawan said. The president of the senate added that government has been doing a lot as part of its obligations in the power sector. 

 

"I'm quite aware that for this year, probably starting from last year, over N600 billion was earmarked for this sector to improve.

"The potential increase in the tariffs is definitely something that will be of concern to us in the national assembly.

"There is too much stress in the lives of Nigerians today and indeed across the world because of the challenges imposed by the COVID-19 pandemic and even before then, we had issues that would always make it tough for our people to effectively pay the tariffs.”

Speaker Gbajabiamila said, "there is time for everything. A well intended programme or policy of government can fall flat on the face and never recover if you do it at a wrong time. I think we all agree to that. "There cannot be a time as bad as this for us to increase anything. Forget about electricity, anything. Whereas, even in times of decreasing revenue, we are even reducing the pump price (of petrol). I don't know how we can justify an increase in the cost of electricity at this time in Nigeria." 

Gbajabiamila also wondered if President Buhari has been carried along.

"Whatever will affect his government is something that should concern all of us. I think this will affect his government. This timing. Not the increase. The timing. "How did we arrive at the tariffs or costs? Who were the stakeholders that were present? What was the role of the national assembly? More importantly, is the president aware of this, because the president is perhaps the biggest stakeholder of all, apart from the Nigerian people. “I think it will affect his government and if it is going to affect his government, we should all rally around our people, our president and the government to make sure we do the right thing," he said.

During the meeting, the DISCOs admitted that they were not well prepared for the planned hike in tariffs even though they desire the increase. The representatives of the DISCOs said the government should continue to pay for the difference between the present tariff and what was considered the appropriate tariff. Those who attended the meeting were the representatives of NERC, Kano Electricity Distribution Company, Ikeja Electricity Distribution Company, Kaduna Electricity Distribution Company and Eko Electricity Distribution Company.

The lawmakers also promised to discuss the issue with President Buhari. 

SOURCE: Pulse