Wednesday, March 30, 2016

Nigerian government illegally imposed electricity tariffs on Nigerians

The new increased electricity tariff rolled out on February 1 by the Nigerian Electricity Regulatory Commission, NERC, was illegally imposed on consumers, an investigation has shown.

The agency implemented the new tariff, which increased charges for electricity consumption by 55 per cent to 65 per cent, in defiance of the law setting it up.

The federal government may be compelled to pay back to Nigerians the increased rate they have paid to electricity supply since February 1 when the new tariff regime took effect.

Specifically, the announcement of the new tariffs breached Section 76 sub sections 6, 7 and 9 of the Electric Power Sector Reform Act of 2005.

Section 76 (6) requires the NERC to gazette any review of existing tariff methodology before it comes into effect.

The Act states: “Prior to approving a tariff methodology, the Commission shall give notice in the official Gazette, and in one or more newspapers with wide circulation, of the proposed establishment of a tariff methodology, indicating the period within which objections or representations in connection with the same may be made to the Commission.”

By that section, the regulatory agency ought not only to have given notice in a gazette but also in newspapers with wide circulation and even given room for the public to make comments and objections before the new charges could take effect.

In Section 76 (7), the law further reinforces the need for wide consultations before such new tariffs can take effect.

Section 76 (7) envisages that in preparing a new tariff methodology, the agency would “(a) consider representations made by license applicants, other licensees, consumers, eligible consumers, consumer associations, associations of eligible consumers and such other persons as it consider necessary or desirable.”

Subsection 7 “(b) evidence, information or advice from any person who, in the Commission’s opinion possesses expert knowledge which is relevant to the preparation of the methodology.”

Furthermore, Section 76 (9) states: “If it appears to the Commission that a tariff methodology should be changed, the Commission shall give notice in the Official Gazette, and in one or more newspapers with wide circulation of the proposal to change the methodology, indicating the period within which representations in connection with the proposal may be made”.

Of all these legal requirements, the only one fully complied with by NERC was that it announced the new tariff in the newspaper.

It did not give any notice in a gazette as spelt out by the Act. Furthermore, from the outcry and opposition which the imposition of the new tariff generated among the general public, including the Transmission Company of Nigeria, TCN, Manufacturers’ Association of Nigeria, MAN, and the House of Representatives Committee on Power, which passed a resolution barring NERC from increasing tariff, it is obvious that the agency did not do enough consultations.

The NERC announced the new tariff methodology in December, 2015 with increased charges for electricity consumption, although it removed a controversial monthly fixed charge on retail consumption.

Announcing the new tariff, then chairman of NERC, Sam Amadi, said that the new Multi Year Tariff Order (MYTO) was for a 10-year period between January 1, 2015 and December 31, 2024.
But it effectively took off on February 1, 2016.

With the new tariff, consumers under the residential classification (R2) in Abuja would have to pay N24.30 per kwh instead of 14.70 per kwh for electricity, an increase of N9.60 or 65 per cent, although they would no longer pay the fixed charge of N702.

Customers under Commercial classification (C1) had their tariff increased to N36.65 per kwh from N23.61 per kwh, a difference of N13.04 or 55 per cent.

In the same vein, residential consumers are paying more in Eko (N10), Ikeja (N8), Kaduna (N11.05), Benin (N9.26) and other electricity distribution areas.

Organised Labour kicked against the new tariff regime as soon as it was announced with the President of the Nigeria Labour Congress, Ayuba Wabba, saying it is a rip off.

“Congress considers as illegal, unfair, unjustifiable and a further exploitation of the already exploited Nigerians, the 45 per cent increase in electricity,” the labour leader declared, threatening that workers would be called out on a nationwide protest to force a reversal.

The Manufacturers Association of Nigeria, MAN, also rejected the new tariffs and said that it would fight it in court.

MAN president, Peter Jacob, expressed surprise that NERC went ahead to introduce the new tariff, observing that there is a subsisting court injunction restraining the agency from imposing the tariffs.

The learnt that a meeting called by NERC’s acting chairman, Anthony Akah, with the MAN management to explain the new tariffs, was rebuffed as members of the organisation insisted that they would not discuss a matter that is before the courts.

When our reporter spoke to MAN’s director of communications, Israel Osadipe, last week Wednesday, he said that the association was still opposed to the tariff and had not changed its position because the case is in court.

He added, however, that members of MAN were having discussions “at an informal level” with stakeholders, including NERC, about the matter.

The House of Representative too stood stoutly in opposition against the new tariffs and passed a resolution directing NERC not to go ahead with the new charges until it concluded investigations into the activities of the commission and distribution companies, Discos.

After the tariffs took effect, the House Committee on Power invited the NERC management to explain why its directives were flouted.

It was gathered that the regulatory agency has since explained its stand to the legislative House, telling members that it was doing exactly what the National Assembly set it up to do.

In defence of the NERC, a source told this website that the agency had, indeed done its work which is to send the new tariff regime to the office of the Attorney General and Minister of Justice whose responsibility it is to gazette the information.

“NERC has done its bit. When the need for a review exits, we consult with all stakeholders and then come up with new tariffs. We then send the tariff to the Ministry of Justice for them to gazette. We did that since the early in the year,” the source, who does not want to be named, said.

However, the Director of Press in the office Ministry of Justice, Charles Nwodo, said that the impression given by the NERC source was wrong and that it is not the responsibility of the ministry to gazette anything for government agencies.

“The fact is that if they are going to gaztte it (the new tariffs), it is the government press that will gazette it. It is the responsibility of the Government Press. The Ministry of Justice is to give approval. The process is that they send their proposal, it is vetted by the Ministry of Justice and sent back to them for onward transmission to the Government Press. It is the Federal Government Press that will gazette it.

Asked if the ministry had received the new tariffs from the NERC for approval before being sent to the Government Press for vetting, Nwodo said he was not aware that any tariffs sent to the ministry for approval.

He asked for time to find out if the ministry ever received such a request from the electricity regulatory agency but had not done so until the time of going to press.

Premium Times

No comments:

Post a Comment