Discos Promise Gradual Application of New Tariffs

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Chineme Okafor and Peter Uzoho

Electricity distribution companies (Discos) have said application of the new tariffs recently reviewed by the Nigerian Electricity Regulatory Commission (NERC) would be gradual and less painful to customers.

They also attributed the inability of the Transmission Company of Nigeria (TCN), generation companies (Gencos) as well as the Discos to deliver stable power supply and provide satisfactory customer services to electricity consumers in the country to inappropriate tariffs.

Speaking on Arise TV News, a sister broadcast arm of THISDAY, the Director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Mr. Sunday Oduntan, said inappropriate pricing was responsible for the lack of efficiency of the operators.

He said: “I think we need to be more sensitive to the need of our customers. I think we are not there yet but the Discos that I represent and everybody, all stakeholders in the value chain are not efficient enough. “Efficiency is very important as I have spoken about the link between efficiency and pricing.

“So, I agree 100 per cent that there is the need for more consumer confidence, consumer education; and like now, people have been talking about tariff increase in January 1. All those ones, we need to do more in terms of letting people be aware of what is going on. The piecemeal or gradual increment makes people to think that they increase tariff all the time.”

He commended NERC for its efforts in making in the last six month to stabilise the power sector.
“The last time a review was done in this sector was in 2015 and it took effect on February 1, 2016. What the law said is that there should be minor review every six months, which is why I have commended NERC for coming out for the first time since 2016 to do what we should have done every six months from that first quarter of 2016.

“What they are proposing is slight increase that will occur in April 2020, and it is even planned to be a gradual thing. We will not have what should be the appropriate pricing of the product this year, what is planned is to see that by the end of 2021, there will be a way to ensure that appropriate things are done such that there will not be that huge shortfall,” he stated.

Oduntan, in a separate statement yesterday, also said the application of the new tariffs by the Discos would be gradual and less painful to electricity consumers.
He added that it would take until 2021 before the differences in the reviewed tariff could be fully passed to consumers.
Oduntan explained that they wanted to clarify to Nigerians how the new tariff framework would be implemented with the aim of clearing the misunderstanding that its announcement had created.

“We make this statement to inform all our esteemed customers that we are not unmindful of news making the rounds that electricity tariffs have been increased effective January 1, 2020 as reported in some print and electronic media.

“For clarity and improved understanding, we state…the Nigerian Electricity Supply Industry (NESI) is primarily regulated by the Nigeria Electricity Regulatory Commission (NERC). NERC is empowered by the EPSR Act (Electric Power Sector Reform) to make orders and declarations in a manner promoting efficiency and sustainability within the NESI,” said the ANED.

According to the association, the NERC has been empowered by EPSRA to carry out minor reviews of power tariffs under the Multi-Year Tariff Order (MYTO) 2015 framework twice a year.
It explained that accurate electricity tariffs help in ensuring efficient power supply as well as assure market participants of their costs recovery and return on investment.

“This makes the business viable. NERC has just reviewed the MYTO 2015 and has published an order on tariffs and minimum remittance for January-June 2020. The tariffs anticipate changes in the currency exchange rates between the United States and Nigeria, changes in the rate of inflation and gas prices,” Oduntan added.