NERC and Nigerian Leaders’ tariff Burden
The recent approval of a tariff hike for the Port Harcourt Electricity Distribution Company (PHED) by the Nigerian Electricity Regulatory Commission (NERC) has once again ignited concerns over the rising cost of electricity for consumers. This latest move, coming amidst calls to reverse the already contentious Band A tariff increase, further exacerbates the burden on Nigerian households and businesses, casting doubt on the government’s commitment to addressing the nation’s electricity challenges.
The approved tariff hike, which affects customers categorized as Maximum Demand 2 Special (A – MD2 Special), represents an increase from N206 per kilowatt-hour to N225/KWh. This is a terrible increase and a significant burden for this category of customers, who are typically common men and women, not title or political office holders, and small industries and commercial establishments.
The justifications provided by NERC for the tariff hike – accounting for changes in pass-through indices such as inflation rates, exchange rates, and gas prices – are understandable from a regulatory perspective. However, they fail to address the fundamental issue: the inability of the Nigerian electricity sector to provide reliable, affordable, and accessible power to its citizens.
For the average Nigerian, the impact of these recurring tariff increases is far-reaching. Households already grappling with the rising cost of living, stagnant incomes, and widespread poverty face the added strain of higher electricity bills. This often leads to difficult choices between essential needs like food, healthcare, and education, further perpetuating the cycle of poverty and economic stagnation.
Furthermore, the tariff hike on small-scale industries and businesses has broader implications for the nation’s economic growth and competitiveness. Higher electricity costs translate into increased production costs, which may ultimately be passed on to consumers through higher prices for goods and services. This, in turn, erodes the purchasing power of Nigerians and hinders the growth of domestic industries, potentially leading to job losses and further economic hardship.
It is worth noting that these tariff increases are occurring in an environment where the quality of electricity supply remains abysmal. Frequent power outages, voltage fluctuations, and inadequate infrastructure like bad transformers that are usually fixed by the small communities using PHED lights have become the norm, forcing many households and businesses to rely heavily on expensive alternative sources of power, such as generators, further compounding their financial burdens.
The Nigerian government’s policy direction on electricity subsidies, as cited by NERC, raises additional concerns. While subsidies are intended to alleviate the financial burden on consumers, their effectiveness is often undermined by inefficient implementation, corruption, and a lack of transparency. The estimated subsidy benefit of N11.49 billion monthly for PHED customers begs the question: how will this subsidy be effectively channeled to those who truly need it?
The situation highlights the urgent need for a comprehensive overhaul of the Nigerian electricity sector. Merely adjusting tariffs without addressing the underlying issues of inadequate generation, outdated infrastructure, and inefficient distribution will only perpetuate the cycle of anger, dissatisfaction, and financial hardship for consumers.
To truly alleviate the burden on the common Nigerian, a multi-pronged approach is required. This should include investments in modern and sustainable power generation technologies, upgrading and expanding the transmission and distribution networks, and implementing robust metering systems to curb electricity theft and improve revenue collection.
Additionally, the government must prioritize policies that foster economic growth, job creation, and poverty alleviation. Increased disposable incomes and improved living standards will enable Nigerians to better absorb the costs associated with reliable and sustainable electricity supply.
In conclusion, the latest tariff hike approved by NERC and Nigerian leaders is a stark reminder of the challenges faced by Nigerian electricity consumers as they, unfortunately, find themselves with leaders who don’t listen. Regulatory adjustments are not necessary but since NERC and Nigerian leaders insist, they must be accompanied by tangible efforts to address the root causes of the electricity crisis. The government, regulators, and industry stakeholders must work collaboratively to develop a comprehensive and sustainable solution that balances the need for cost-reflective tariffs with the economic realities and well-being of the Nigerian people.
Reference
NERC approves new tariff hike for Port Harcourt DisCo published in Punch