FG Approves 3-Month Relief On Electricity Tariff For Nigerians

The Federal Government has approved three months of relief for Nigerian electricity consumers to help alleviate their plights while it tries to find a lasting solution to the recent hike in electricity tariff.

The relief would be varied across different bands of electricity consumers and would last up till December 31, 2020, according to a document seen by Newsmen.

The relief was part of two-phased temporary measures agreed by the ad-hoc technical committee of the federal government, the labour unions and electricity distribution companies, to avert protests by the labour unions at the end of the two-week suspension on tariff hike which lapsed on Sunday, October 11, 2020.

The committee has the Minister of State for Labour and Employment, Festus Keyamo, as its chairman.

Members of the committee include the Minister of State Power, Godwin Jedy-Agba; Chairman Nigerian Electricity Regulatory Commission, Prof. James Momoh, Special Adviser to the President on Infrastructure, Engr. Ahmad Rufai Zakari, Dr. Onoho’Omhen Ebhohimhen (NLC), Comrade Joe Ajaero (NLC), Engr. Dr. Chris Okonkwo (TUC), Engr. Adeoye Fadeyibi (Distribution Company Representative I), and Engr. Haruna Garba – Member (Distribution Company Representative II).

A communique dated October 8, 2020, and signed by representatives of the different stakeholders at the end of the deliberations, said the members “adopted a two-phase approach to proffer solutions that would help resolve issues affecting the (power) sector in the medium term, whilst providing relief to customers immediately.”

It said, “The immediate relief would be provided to citizens for a 2 to 3-month period (not later than 31st of December, 2020), being the timeline for the conclusion of an extended scope of work for the Technical Committee.”

The committee, in the first phase, agreed on: “i. Use NESI VAT proceeds to provide relief in electricity tariff rates: Following extensive analyses it was realised that VAT proceeds from the NESI could be used to secure varying levels of reflief in customer tariffs across bands A, B and C, ensuring that all customers receive some form of relief during this difficult time. Cumulatively the per kWh relief that will be provided to customers in bands A, B and C is N10.20 per kWh, which will be distributed across the bands. The relief will be in place for the 2 to 3-month period required for the Technical Committee to conclude its extended scope of work. It should be noted that Bands D and E tariffs were not changed, and this freeze will remain in place.

“ii. Acceleration of National Mass Metering Programme (NMMP): This programme will distribute 6 million meters to Nigerians free of charge. The Central Bank of Nigeria (CBN) having approved the funding for this programme, the meters will begin being distributed to consumers immediately using stockpiles in country and local assemblers. The cost of meters shall be recovered from the DISCOs.

“iii. Local Procurement of Meters for the NMMP: The 6 million meters to be procured for the NMMP will only be through local meter manufacturers and assemblers. This will create jobs and a new meter manufacturing sub-sector in the country.

“iv. Salary Protection for Electricity Workers: In implementing payment discipline measures for the DISCOs, the Government will ensure that the salary for Electricity Workers shall be protected in the revised payment waterfall structure for the NESI.

“v. Mandatory Monthly Publication by NERC of allowed billings in Naira for unmetered Customers to make the Capping Regulation more effective: NERC will publish maximum charges in Naira for consumers without meters (in support of the capping regulation). Current rates at times are published in energy usage kWh and are difficult for consumers to reconcile against their bills.

“vi. Mandatory Refund for any overbilling during system transition by the DISCOs: DISCOs must refund consumers that have evidence that they were overbilled during the transition to the Service Based Tariff. Any evidence of overcharging identified through the extended Ad-Hoc Committee scope will also be reimbursed by the DISCOs.

“vii. Freezing of customer band migration during the interim period: In order to protect customers from changes in tariff during the 2-3 month period of review by the Joint Technical Committee, DISCOs will be directed to temporarily suspend customer band migration. This means that while DISCOs are expected to fulfil their Performance Improvement Plans (PIP) thereby improving the quality of service to customers, no added charges will be passed on to customers during this period. This measure is aimed at building confidence in the Service Based Tariff structure.

“v. Inclusion of Labour representation in NERC: The Committee had no objection to the inclusion of Labour into the Nigerian Electricity Regulatory Commission. Government is committed to fully engage Labour in the ongoing review of the Electricity Power Sector Reform Act (EPSRA) 2005. As a result, the Executive will recommend to the National Assembly inclusion of Labour representation into the Nigerian Electricity Regulatory Commission.”

The committee said phase of the measures would concern extensive review of key sector reforms, during which it would meet over the next 60 to 90 days to resolve other outstanding issues.

In the second phase, the following measures would be taken: “I. Review of the MYTO inputs: The Ad-Hoc Committee will review inputs to the MYTO model and ensure the assumptions and factors for the model are correct and accurate. This will also include clarifications on the reasons for variance in electricity tariff across DISCOs.

“ii. Ground Audit of implementation across DISCOs: Visits will be made to all 11 DISCOs and a review will be done on the implementation of the Service Based Tariff with a view to ensuring consumers are not overcharged, placed in wrong bands or not granted hours of electricity committed by the DISCOs.

“iii. Review of Monitoring and Evaluation mechanisms set up by NERC and the DISCOs.

“iv. Gas Pricing: Review mechanisms for pricing the Domestic Supply Obligation (DSO) and the foreign exchange component(s).

“v. Decentralization of the Grid: Explore ways to accelerate investment and bring more players into the sector, drive investment and reduce costs for end-users. Options should be in addition to the Franchising and Mini-Grid regulations.

“vi. Import Duty Waivers for the Electricity Sector: Investigate and recommend ways for the Electricity Sector to receive incentives that will reduce costs across the value chain that will benefit the end user.

“vii. Resource Capacity: Perform gap analysis on employee count and capability at NERC and NEMSA to ensure adequate resourcing for the sector. NEMSA to certify the accuracy of meters before installation. With the ramp up in metering through the NMMP, there is a need to ensure adequate resourcing.”

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