The pricing system aids inefficiency in the sector
Almost six years after the privatisation of the power sector, Nigerians are yet to know the difference between the old discredited regime of the Power Holding Company of Nigeria (PHCN) and the new one managed by the “euphoric” investors. This is despite the best efforts of the current Minister of Power, Works and Housing, Mr Babatunde Fashola. Across the country, there is hardly any part that does not experience power failure on a regular basis.
In most places for several days and sometime, weeks, many people have no access to electricity to lighten the burden of living. Lack of electricity also limits their access to healthcare, education and other opportunities, including running their businesses. Many small and medium scale businesses have been crippled due to the prohibitive cost of generating their own power. Even the big business ventures, particularly the manufacturing ones, are also feeling the biting effect of energy poverty with consequences stretching to every part of the economy. This perhaps makes the country one of the toughest places in the world to do business.
Last week, the Enugu Electricity Distribution Company (EEDC) in Aba threatened to disconnect power supply to houses whose landlords vowed not to pay bills until their houses were metered. The grouse of the power consumers, according to their leader, Chief Alphonsus Udeigbo, was that “the federal government told them (Discos) to give customers pre-paid meters because people are supposed to pay the worth of their consumption. They have been using us to meet their inordinate targets and we are agitating for payment of the worth of power supplied to us which is not what is happening to us right now.”
One of the main challenges in the power sector today is consumers being billed for what they do not consume. That was what compelled the House of Representatives to pass the Electricity Power Reform Act (amendment) Bill 2018 which prohibits and criminalises estimated billing. The proposed law, which has been transmitted to the Senate for concurrence, compels all electricity distribution companies to give prepaid meters to applicants within 30 days.
Aside the squabbling between the Manufacturers Association of Nigeria (MAN) and the electricity Distribution Companies (Discos) over the Eligible Customer Scheme (ECS), the power being generated from the national grid remains insufficient. But the main challenge is that of tariff. Today electricity is a commodity that can be made available at any place at different prices and at what the users are ready to pay. If the users are looking for electricity for economic purposes they are likely to pay for the right price. If the villages are to enjoy electricity for the most part of the day on government account, then there must be a structured regime of subsidy to account for that.
The federal government seems to have abandoned the Multi Year Tariff Order (MYTO). In fact, most of the stakeholders in the sector complain that the power reform has practically been put on hold since 2015 because the administration of President Muhammadu Buhari is reluctant or unwilling to complete privatization of the industry. Whatever may be the problem with the owners of the Discos, it does not help that they cannot adjust price to cover cost. With enumerated data of customers, the mass market can be separated and subsidized while commercial houses and industries should at least be made to pay the economic price of electricity they consume.
The challenge is that we are still not able to read the trending dynamics of power supply and management systems in the world. And until we do that, Nigerians will continue to grope in darkness both in practical and metaphorical terms.