Cost reflective tariff, catalyst for constant power supply

Engr. Nnamdi C. Ibeh

SIR: Stakeholders have thought that the Electric Power Sector Reform Act of 2005, which called for the unbundling of the national power utility company into a series of 18 successor companies of six generation companies, 11 distribution companies and a national power transmission company covering the entire nation should bring the required succour to Nigerians and provide the much needed electricity supply to our dear nation. But this has failed due to many issues associated with the unbundling. Nigeria has one of the lowest electricity tariffs in the world and this has posed a huge problem for investors to invest in the electricity industry. It is the dream of every investor to have good return on investment. This has not been the case for investors in the electricity industry due to tariff structure in place. Many of these investors are already struggling for their return on investment which is so difficult to come and also the inability of NERC to take decisive action on tariff increase and put up measures for proper monitoring of the electricity industry.

The generation companies (GENCOS) produce the energy which is sent to the central pool and distributed through the transmission lines to the distribution companies (DISCOS) that supplies the energy in bits to their customers. These DISCOs collect money for sales of electrical energy from their customers on behalf of the Nigeria Electricity Supply Industry (NESI) who are the major market stakeholders. After payment for these energies, these DISCOS are left with nothing; many had to borrow to pay salaries and maintain their power infrastructures. Therefore, this justifies the need for a cost reflective tariff that will impact and improve the entire NESI in terms of deliveries to the end users.

The meter assets provider (MAP) which was launched in May 2019 in order to close the metering gap and ensure every household is metered as soon as possible has failed partially. This project has not worked well as many Nigerians are crying for non-availability of meters. This failure should be attributed partly to NERC, partly to DisCos/MAP and partly to the customers. NERC’s inability to enforce compliance on DISCOS and meter providers has contributed to MAP’s failure. The capping of billing system of customers without meters is only a way to seek relevance in the mist of these failures since the entire metering policy is designed, controlled and monitored by NERC. In some DISCOS, these meters are not made available by the meter providers, thereby giving customers false hope and waiting for too long while in other DISCOS, these meters are available but the majority of customers are not interested in purchasing the meters, many customers are now happy with the capping billing system which has reduced their estimated bills to the barest minimum hence encouraging them not to purchase meters.

In order to close the gaps on metering, the NERC must ensure that the Meter Asset Provider (MAP) guidelines are followed strictly by all involved parties. Monitoring should be intensified to ensure that all DISCOS follow the laid down policies. NERC as a regulatory body must ensure that all certified meter providers meet up with their set targets at stipulated times to limit shortfalls. Customer’s sensitization on MAP must be aggressively carried out on social media, radio and television and other media outlets in order to encourage them to purchase meters. An enquiry from one of the DisCos about the reason for disparity in supply availability on feeders shows that feeders with larger number of metered customers enjoy more availability.

The implementation of a cost reflective tariff in Nigeria’s power sector comes with a lot of benefits and will go a long way in giving the citizens the desired constant electricity supply they have long been yearning for. There is a great responsibility on the part of the DISCOS to make the network conducive and ready to supply electricity 24/7. Communities will have the ability to negotiate with DISCOS on the number of hours of electricity they will need a day and be able to pay for it.  Gencos, TCN and Discos must invest heavily in hi-tech modern technical equipment for promptly locating and clearing of faults and invest on infrastructure of replacing bad poles, cross arms, sagged lines etc. and train human resources to improve and maintain power supply. NERC as a regulatory body should be bold enough to sanction any defaulter and customers will smile again.

• Engr. Nnamdi C. Ibeh,

Abuja.