How not to hike electricity tariff

In April 2024, Musiliu Oseni, Vice Chairman of the Nigerian Electricity Regulatory Commission, announced that “the commission has approved a rate review of 225 naira per kilowatt hour, from a minimum of 68 naira per kilowatt hour… for just 15 % of the customer population in the Nigerian electricity supply industry.”

And, in what now seems to be a setting up for a dunk on the heads of the 1.5 million electricity consumers—which a recent report claims to be 2 million―on Band A tariff plan, Adebayo Adelabu, Minister of Power, assured everyone that the 2024 Budget had provision for N1.8 trillion electricity subsidy.

While delivering this coy body slam to electricity consumers, Adelabu also sneaked in a hint that the tariff may still be reviewed upward before the end of the year, because the Electricity Act provides for review of the electricity tariff two times every year.

And, he tried to justify the need to further raise the tariff in 2024, by enumerating the reasons, which include the rising exchange rate, increasing price of gas, and high cost of maintenance of electricity generation, transmission, and distribution infrastructure.
It couldn’t have been anything else, it seemed. But he should have also added inappropriate policy choices—of several generations of governments before the current one―and partial sale and commercialisation of electricity generation and electricity distribution companies by the government of President Goodluck Jonathan to crony capitalists, and the retention of the national grid in the hands of bureaucrats.

One major problem is that those who bought the facilities lack the managerial, financial, and technical capabilities to run the companies, even though they regard their more-or-less sinecure equity in those companies as compensation for their less-than-patriotic service to the country.

To borrow and rework a phrase from Bashorun MKO Abiola, the presumed winner of the June 12, 1993, presidential election that was cruelly annulled by the regime of military President Ibrahim Babangida, “Nigerians held the horns of the cow for the crony capitalists to milk!”
Some observers feel that the minister is probably insisting on raising the tariff because he feels that many consumers rack up high electricity bills. After all, they are usually careless by switching on electrical appliances, like air-conditioners, that they may not necessarily have to use all the time.

Someone asked if the minister takes his own counsel in his office where the electricity bill is paid by the Federal Government, or in his home which may likely be an official quarter.

The minister, who admitted to having given the unsolicited advice to electricity consumers to cultivate what he described as the “culture of managing energy consumption,” has, however, apologised to those who may have been offended by his unsolicited counsel.

NERC has finally come up with the sledgehammer announcement that the government is feeling the weight of about N181.1 billion monthly subsidy bill, and, as a result, electricity tariff would have to be hiked for in Band A, who were promised 20 hours of electricity every day.

And that would, of course, further harm the finances and well-being of these already impoverished consumers who are reeling under the weight of subsidy removal and the floating of the Naira, even though NERC had unilaterally placed them in Band A tariff plan without asking them if they were game for the tariff plan.

What the consumers really need is not the minister’s counsel, but appropriate policies to mitigate their gradually depleting standard of living on top of irregular electricity supply. That is why he was appointed as minister of power. As they say on the streets of Lagos, “The minister should shake a leg!”

Apart from the boast by the minister of power that more than 40 per cent of Nigerians currently receive 20 hours of electricity per day, it is actually too little and insignificant. 100 per cent of Nigerians should be able to get 24 hours supply of electricity every day.
The minister sounded like he expected those Nigerians that he forcibly conscripted into the Band A tariff plan should be grateful for even the irregular electricity supply that they get, a reminder of a former minister of communications who said telephone is not for everybody.

By the way, the minister should stop that nauseating claim that the (less than modest) achievement of the electricity sector is inspired by the Renewed Hope agenda of President Bola Tinubu, a man who has not claimed omnipotence or invincibility.

The current template of the electricity industry can only guarantee shortages and consequent inefficiency that causes the accountant minister to think that inordinately holding down Nigerians for milking by the Gencos, the Transmission Company of Nigeria, and the Discos, is the silver bullet to sorting out the problems of the sector.

One should add, for the umpteenth time, that GenCos, DisCos, and electricity grids that currently operate in silos, should be integrated under one management in each of the markets that have already been demarcated for them.

What this means is that the transmission lines within the Ikeja market, for instance, should be ceded to Ikeja Electric, which will merge with the GenCo which currently uploads electricity to its market. All three components of electricity supply should be under one roof in each market.

If the Minister is not too sure of the expediency of this model being suggested, he could seek clarification from experts, amongst which should be Professor Barth Nnaji, who is possibly Nigeria’s most illustrious minister of power.

The gentleman is a thoroughbred professional who understands the technical demands and the dynamics of the ecosystem of the electricity system. When he was minister of power, electricity supply was very regular.
This matter should be treated expeditiously like that of the man who appeared in a dream to entreat Apostle Paul to “Come over to Macedonia and help us!” Like Paul, Prof Nnaji would likely come to help Nigeria overcome the electricity sector debacle.

It is not fair for the electricity tariff to be raised by about 330 per cent, from N68 to N225 per kilowatt hour, for Band A tariff plan customers in April and to now start hinting at another hike in less than six months, even if the law provides that tariffs can be reviewed two times in one year.

If the government goes ahead with this wicked intention, it may well be the final straw that would break the camel’s back. It will further impoverish the disappearing Nigerian middle class that is barely coping with 34 per cent inflation and they may be easily persuaded to join the lumpen plebeian proletariat as they embark on street protests.

This won’t bode well for a government that came into office with roughly one-third of the votes of less than one-fourth of the electorate. That should not be the testimony of a government that is committed to Section 14 of the Constitution which sets the security and welfare of the citizens as the primary responsibility of the government.

The minister of power needs to understand that inappropriate and ineffectual government policies are the major causes of the inability of the electricity sector to deliver regular electricity to Nigerian citizens at an affordable tariff rate. No other reason.

Twitter@lekansote1