If you think the current electricity tariff is high and bordering on exploitation then things may just be getting worse with the current policy on the horizon, set to force the hands of the DisCos.
A recent Notice of Force Majeure that was submitted to the Bureau of Public Enterprises (BPE) by some electricity distribution companies (DisCo), based on the recent issuance of the Eligible Customer regulation by the Nigerian Electricity Regulatory Commission (NERC) will now allow for certain customers who consume more than 2 MW of electricity per month to leave the DisCo network and contract directly with power generators for the supply of power.
Now, this isn’t particularly ‘new’ news as we exclusively reported earlier in the year that the minister of power had declared plans to allow certain customer buy power from the GENCOs directly.
Let’s break down the jargon, in 2015 the DisCos met with members on the public with NERC supervising these sessions after these consultations tariffs were set for different DisCos based on the consultations and the variables in each area, it was called the Multi-Year Tariff Order or MYTO 2015. A key part of this model stated that the big customers who consume these huge watts would be ‘overcharged’ as some sort of cross-subsidy so as to enable you and I pay less because electricity is expensive, this system was put in place with other terms and conditions which industry stakeholders agreed would allow for tariff fluctuations over a 10year period and eventually the tariff will balance out, the industry would be more stable and we will be happy paying somewhere around N20.
Enter Eligible Customer Regulation, this new regulation is simply telling DisCos that those big customers cannot continue to reside within their network, this essentially means that your subsidy and my subsidy is about to jump out of the window, we are placing a bet that some people may be made to pay as much as N68, let that sink in, N68. Eligible Customers are the premium customers that cross-subsidize electricity to the residential class of customers. Such cross-subsidization, for some DisCos, is based on a ratio of N10/kWh of Eligible Customer consumption to N1/kWh of residential class consumption. The same class of Eligible Customers also contribute an average of 60 percent to DisCo revenues.
It is hard to fathom why this policy is such a big deal and must be enforced when we still have less than 30% of the population and possible customer base identified as customers, NERC put the number of electricity customers at about 7.5 million. of this number, less than 4 million have been metered nationwide. According to the NBS, there are currently 28.1 million homes in Nigeria which mean that there is a shortfall of over 20 million in customer enumeration and about 25 million shortfall in metering. It is thus insensitive that at this time there is a policy shift to drive the cost of electricity through the roof, this is a terrible situation as about 25 million households around the country will be further exposed to an explosion in estimated billing.
This policy is ill-conceived and should be reversed, 25 million Nigerians will be made to spend more on electricity which they cannot measure as they are unmetered at this time. More money is being left on the table by the power sector if it fails to work together to address this issue, the bulk of those 25 million people still survive on below $1 a day with our minimum wage of N18,000, this policy will simply make life worse for the everyday Nigerian. Fellow Nigerian, before the blame game begins with the tariff hike in 2018, you need to be aware that the new FGN policy will further screw up that your NEPA bill which is already making you cry.