HIKE IN ELECTRICITY TARIFF IS INSENSITIVE: CARE calls on electricity consumers, labour and pro-labour organsations to resist this planned extortionist tariff hike
For renationalization of power sectors under democratic control of workers and consumers
By Shoyombo Monsuru, National Secretary CARE
The Nigerian Electricity Regulatory Commission (NERC) and the Buhari-led federal government have reiterated their plan to increase electricity tariff in line with the December 2019 Minor Review of Multi Year Tariff Order (MYTO) that will take effect on April 1, 2020 and to carry out another hike at the end of 2021. This hike demonstrates the insensitivity and anti-poor character of Buhari government considering the rising cost of living and the growing rate of poverty. Coalition for Affordable and Regular Electricity (CARE) condemns this planned hike and calls on NERC and the Buhari-led government to jettison such plan.
We have always maintained that the power sector privatization is a ruse and only meant to make a few privileged people super richer, and that is what is playing out graphically. Contrary to the tale that was sold to the public, privatisation of the power sector has never ushered in any meaningful investment, rather the so called investors are parasite that are feeding fat from public interventions and bailouts that are currently over one trillion Naira.
The only major investment between 2013 and now is the money the power companies paid to the federal government to procure the licenses, an amount that was used to upset the liabilities and a huge chunk of this money are credit from the commercial banks that are yet to be paid fully. Between 2005 and now the power sector have gulped over 20 billion dollars without any fundamental improvement. Generation, Transmission and Distribution are currently wobbling as we regularly witness system collapse, while facilities and infrastructure are still in deplorable conditions, and the consequence is regular blackout imposed on most communities. Despite the obvious incapacity to sustainably grow the power sector, the interest of the power companies, NERC and the federal government is to constantly hike electricity tariff to a level that guarantee huge profit for the power companies. This is a reward for failure, in spite of plunging many consumers into darkness most of the time.
The justification for the hike in electricity tariff by NERC is hinged on these three parameters: (1) average monthly inflationary rate of 11.3% for the period January October 2019; (2) CBN official exchange rates of Naira to Dollar of N306.90 plus 1% cost of transaction amounting to N309.97; (3) the price of natural gas and its transportation for the power sector put at $3.3 but that some generation companies had contracted a different gas price higher than the regulated price; (4) the US actual average monthly inflation rate of 1.8% for the period January to October 2019.
These parameters are by no means the fault of the working masses and electricity consumers but the failure of the Nigeria ruling elite including the past and present governments. To hinge the hike of electricity tariff on Nigeria inflation shows how Nigerian government piloting the economy round in circles because cost of electricity, which is central to production, services and livelihood is partly responsible for the high inflation in the first instance and relying on it amounts to embarking on endless journey of higher inflation; What is most ridiculous is relying on US inflation to increase tariff in Nigeria apparently to take care of the cost of credit in the US despite the fact that the power companies hardly bring foreign investment but heavily rely on Nigerian banks and government bailout. The gas price and transportation at $3.3 is one of the highest in the world is an indictment of the government in a country that is a gas producer and has a huge reserve.
The 2015 tariff hike that took effect in February 2016 has embedded in it the cost of providing and maintaining prepaid meters but the Distribution companies refused to provide meters to all electricity companies and have gotten the NERC to come out with a policy that forces consumers to pay exorbitant prices of N38,000 (one phase meter) and N70,000 (three phase meter) having created a new set of exploiters known as meter provider companies hereby unfairly transferred the burden of paying for meter (means of measuring electricity consumption) from the Distribution Companies to the overburdened consumers.
NERC termed the new tariff hike as “Minor Review” when in actual fact the increment is between 40% and 90% depending on the division of consumption and is planning another onslaught (tariff hike) at the end of N2021. Most of the Distribution Companies, R2TP (a class of residential consumers) have higher percentage increment than the commercial and industrial class consumers, which is an indication that poorer consumers are the worst hit. For instance the R2T residential consumers for Eko Distribution Company will pay a percentage increment of 90%, R2TP consumers of Ikeja Electric will pay a percentage increment of 76% while R3 consumers of Ibadan Distribution Company will pay a percentage increment of 78%!
In the absence of massive or required public investment into the power sector, it is illusory for the self-serving ruling class and government to expect the profit-first private sector to guarantee adequate power or make the already overburdened consumers pay for the growth of the power sector in form of higher tariff. However, the fact that the previous public investment of over $20 billion were mostly looted by elite few in government and private sector means that the required massive public investment must be coupled with democratic and transparent management in order to sustainably grow the power sector such that electricity tariff will drop to an affordable rate and guarantee uninterrupted power supply.
CARE calls on community people, activists, pro-labour organisations, trade unions and their leaders to begin the mobilization of Nigerian people to resist this senseless and extortionist policy. CARE is demanding the following:
- A halt of the planned electricity hike and the reversal of the present electricity tariff to the pre 2015 MYTO without fixed charge.
- Issuance of quality prepaid meters to all consumers at no cost.
- Renationalisation of the power sector.
- Massive public investment in the power sector as well as transparent and democratic management by workers and consumers.