Democratic Socialist Movement

For Struggle, Solidarity and Socialism in Nigeria

By - DSM



Nigerian Electricity Regulatory Commission (NERC) has increased electricity tariff from between 30% to 55% depending on the distribution company or the consumption class. The Buhari-led government is not only insensitive to the plight of Nigerians, it is also callous. The Coalition for Affordable and Regular Electricity (CARE) condemns this senseless hike in strongest terms and demand its immediate reversal. This is the first shot fired at the working masses as the second term begins, we are sure that more attacks are coming from the Buhari-led government in form of hike in VAT, more cuts in social spending etc.
NERC terms the new tariff regime as “The 2016-2018 Minor Review of Multi-Year Tariff Order 2015 and Minimum Remittance Order for the Year 2019” which takes effect from July 1, 2019. The new tariff regime was premised on inflation and the current exchange rate, two indicators that affects the electricity consumers the most. The last hike in electricity tariff was about 45% hike in February 2016 and when we add the current hike, it amounts to about 90% increment in less than 4 years. Whereas, in the last 5 years, workers have lost over 50% of their earnings to inflation and devaluation of Naira, what government is offering as wage increment is just 10% instead of 66% or 30% as demanded by labour as a compromise.
What the hike in tariff has shown is the failure of privatization, obvious incapacity of the power companies to massively invest, develop the power industry and give consumers affordable and uninterrupted power supply. It is not surprising that NERC has always capitulated to the demands and interest of the power companies who want a tariff regime that will be incredibly high to guarantee a huge profit in the face of failure and darkness because they are in unholy alliance. As a matter of fact, the Discos want a tariff to be hiked to N51 per kilowatt and NERC is just one step to it. The DISCOs and other power companies want N51 or more per kilowatt so that despite no improvement and continuation of a widespread darkness, huge returns are guaranteed. Constant tariff hike leaves the power companies in a state of slumber, discourages investment, and encourages failure and irresponsibility. It is only public massive investment together with workers and consumers’ democratic control that can resolve the problem in the power sector since the power companies lack the financial capacity to grow the power sector. The power companies only got loans from banks running into hundreds of billions of Naira to get the license for about N550 billion without liability.
Labour needs to resist this hike in tariff and other capitalist attacks. Among other adverse effects on the working people, the hike will largely erode the percentage increment in workers’ salary. Labour needs to call a meeting of trade unions, community organisations and activists to jointly mobilize for days of action/mass protest as a step towards a warning general strike to press home their demands for implementation of the minimum wage, reversal of electricity tariff and reversal of the privatization program.
The Federal Government is set to review the licenses of the power companies (GENCOs and DISCOs) this year after the sector was privatized in November 2013. Continuing the privatization program amounts to rewarding failure considering the monumental problems bedeviling the sector despite government having spent over N1 trillion since privatization and about N6 trillion in the last 20 years.
The assurance the immediate past government of Goodluck Jonathan gave before it privatized the power sector was that it would bring about efficiency, lower tariff and bring in massive investment but more than 5 years down the line the crisis has run deeper. Overwhelmingly, many electricity consumers are forced to pay outrageous estimated bills; facilities and power infrastructure remain in a deplorable state; lack of investment to turn around the sector and poor working conditions of electricity workers. The consequence is widespread darkness in many communities; load-shedding and epileptic/poor power supply leading to a situation where in the country with a population of about 200 million people gets a paltry 4000 MW averagely.
In sustenance of a crude exploitation, the government gives constant bailout running into hundreds of billions of Naira. The federal government set up the Nigeria Bulk Electricity Trading Company (NBET) Plc and capitalized it with $800 million in order to secure maximum profit for the GENCOs and DISCOs. Hence, the federal government has squandered about N1 trillion to prop up power companies much more than what the federal government gave to the sector in the previous 4 years before privatization. 46% of electricity generated gets lost during transmission and distribution while the Gencos generate less than 15% of what Nigerians need.
In the consolidation of the bailout of the power companies, the Buhari-led government and the Transmission Company of Nigeria (TCN) have concluded plans to forgo and write-off the N270 billion debt owed by the 11 Distribution Companies. The government has also said that it will sell its 40% shares to investors leaving the sector exclusively in the hands of profiteers, a policy that will further deepen the crisis. To add salt to injury, the Distribution Companies regularly reject a chunk of power generated and transmitted to them due to profit motive.
It is more profitable for the DISCOs to bill customers based on estimation than through actual consumption measured by meter and this explains why the DISCOs have largely abandoned the reading of post-paid meters.
The newly introduced Meter Asset Provider Regulations (MAPR) is aimed at forcing electricity consumers to bear the cost of metering instead of the DISCOs. The federal government has licensed private companies known as Meter Asset Providers (MAP) to issue prepaid meters to consumers as a response to the failure of the Distribution Companies to issue meters to consumers. The federal government earmarked N37 billion grants to the Meter Companies as take-off grant.
The cost of meters and a return on the investment on meter assets has been embedded into the Multi-tariff Order 2 of June 2012 and subsequent electricity tariff hikes imposed on customers and yet the Distribution Companies fail to provide meters for most customers who need them. The Meter providers will charge electricity consumers about N38, 000 and N70, 000 for single-phase meters and three-phase meters respectively. Ordinarily, the Distribution Companies are expected to provide meters at no cost to consumers but NERC and the federal government have capitulated to the demands of the DISCOs because of their unholy alliance.
According to Article V of NERC Meter Asset Provider Regulations: “The current meters being installed by electricity distribution companies are not free as the current tariff being paid by all electricity customers includes a return on the investment on meter assets.”
CARE demands that prepaid meters be issued for free to all consumers that need them.
The current cost of the meters is not affordable for the vast majority because of the poor purchasing power and poverty and it will not achieve the aim of closing the metering gap let alone give meters to everyone that needs them.
CARE rejects the MAPR policy and the new tariff hike because they are anti-poor policies and calls for their reversal. The failure of the privatization policy to revive the power sector calls for re-nationalization of the power sector under the transparent and democratic control of the working masses as a means of ensuring massive investment, efficiency, affordable tariff and uninterrupted power supply.

Chinedu Bosah
National Coordinator

Shoyombo M.K
National Secretary

Coalition for Affordable and Regular Electricity (CARE)