The Nation Newspaper

Tag: tariff

  • Govt eyes 50% tariff cut for IOCs, others

    The federal Government is targeting between 40 per cent and 50 per cent reduction in non-statutory tariffs paid by International Oil Companies (IOCs) and other investors in the oil and gas free trade zones, it was learnt.

    The government plans to achieve this by next month, to mitigate the cost of operation of investors in the zones.

    The zones are Onne Oil and Gas Free Zone, Port Harcourt, Rivers State; Ibaka Oil and Gas Free Zone, Ibaka, Akwa-Ibom State; Warri Oil and Gas Free Zone, Delta State; Lagos Oil and Gas Free Zone and others.

    The Oil and Gas Free Trade Zones Authority (OGFTZA) Head, Legal Department, Mr.Wasiu Sule, in an interview with The Nation, said the non-statutory tariffs are levies and other charges, which operators are paying in the zones.

    He said the government frowned at the charges because they are exorbitant, adding that the development informed its decision to reduce them to 40 per cent and 50 per cent to foster growth.

    Sule said: “OGFTZA, in line with its goal of regulating the zones, has taken some steps to review the tariffs downward. For instance, the tariffs that are currently being implemented by Intels Nigeria Limited are non-statutory and are therefore, illegal. The agency, on behalf of the Federal Government, began the process of reviewing the tariffs around May and June this year. The government is planning to conclude the exercise by December.

    “To achieve results, the government is consulting with relevant stakeholders in the industry, as well as proposing between 40 per cent to 50 per cent reduction in the tariffs for investors operating in the zones.”

    Sule, whose department is charged with the responsibility of handling the exercise, said the consultation is in line with the government’s goal of ensuring transparency and further achieve its goal of developing the oil and gas and allied sectors of the economy.

    According to him, the government is reducing the tariffs in order to make the zones more business friendly to local and foreign investors.

    Also, the OGFTA’s Managing Director, Dr.Umana Okon Umana, said multinational oil companies, the OGFTZA, National Petroleum Investment Management Services (NAPIMS), among others, are going back to the drawing board with a view to provide new tariff structure that would take care of operators.

    Umana, who spoke during an interaction with investors in Onne, Port Harcourt, Rivers State, said the need to cushion the effects of the harsh economy on the investors and further make them improve their productivity, informed the decision to review the tariffs.

    He said the plans followed protests by some licensees on the issue, adding that the licensees have kicked against the implementation of the current tarrifs regime in the industry, known as Industry Wide Standard Tariffs (IWST).

    Federal Government, early this year, expressed its desire to reposition operations of the agency for quality service delivery. It also launched its roadmap, marketing brochure and website at Onne, Rivers State. The roadmap seeks to measure economic and social progress in the oil and gas free trade zones.

    Others are enhancing service delivery, improvement on the ease of doing business and automation of its operation in order to create an enabling environment for operators and further sustain their investments.

  • LCCI: Review rice tariff to curb smuggling

    LCCI: Review rice tariff to curb smuggling

    The Federal Government should consider a downward review of the tariff on rice to curb its smuggling, the Lagos Chamber of Commerce and Industry (LCCI) has said.

    Its Director-General, Mr. Muda Yusuf, said rice smuggling has continued to thrive, in spite of the ban on the commodity, due to high import tariff.

    “Rice is not contraband, you can import rice. What has created the smuggling problem with rice is the tariff and that is what is driving the smuggling. If you take it through the port irrespective of where you source your forex from, you have to pay 70 per cent levy.

    “If you have a product coming through the official channel at 70 per cent, there cannot be better incentive to smuggling than that. So, that is why rice is coming from all over the place,” Yusuf said, in Lagos, during the week.

    He dismissed the claim by the Minister of Agriculture and Rural Development, Chief Audu Ogbeh, that the country would be self sufficient in rice production and would no longer import rice by 2018 as mere academic and not in tune with reality.

    His words: “The Minister said we will be self sufficient in rice production in 2018, but that is just academic. There is nothing on ground empirically. It is desirable, but in terms of empirical evidence, I don’t think it is something achievable.

    “If you do a proper and empirical assessment of the rice market today, the market share of smuggled rice is bigger than the share of rice that is produced locally. So, this is part of the trade policy challenges that we have.

    “It is a popular thing to say that we have to grow rice; the import duty should be high so that we can grow local rice. It is a very patriotic statement to make, but the reality is completely different and policy should align with reality so that we don’t just make policies in vain.”

    The LCCI boss said it was important that the government policy makers got their facts right. “I have heard some government officials say the bulk of the rice in the country is Nigerian rice but that is not correct. The moment we start thinking that way, then we will not do what we need to do,” he said.

    According to him, what is required is to deploy policies to improve productivity in rice production.

  • ‘No cost reflective tariff, no constant electricity’

    A firm, Chibek Instruments Limited, has urged the government and other stakeholders in the nation’s Power sector to explore cost-reflective tariffs to get regular power supply.

    Its Chief Executive Officer (CEO) Charles Ibe said unless this is done, it would be difficult to solve liquidity challenge and daily rejection of transmitted load by Distribution Companies (DISCOs).

    Ibe told The Nation that a cost-reflective tariff would reflect the true cost of electricity supply and remove reliance on government subsidies.

    He said: “The day the Power sector will turn the corner is when the sector is run in a cost-reflective manner.

    “At midday, when industrial plants are working, they will be happy to buy electricity at a higher cost because they are producing with it. But when you go home to rest, you will need a cheaper cost.

    “During the day, when the demand for electricity is high and the Federal Government allows flexibility of rates, it will meet the energy needs of the country at a faster pace and this will encourage production.”

    Ibe said Chibek Instruments had attained 70 per cent completion of a lithium base integration plant, which could help the Federal Government to solve the national power challenge.

    He said: “Our system can help the government to get off the grid during the day, thereby making power available for industrial users.

    “We are bringing a smarter material called lithium iron. One of the things that make the electric motor possible is lithium iron. The technology we are bringing into the market is a hybrid system. We harness energy from different sources, ranging from solar, generator and electricity.

    “The system will store electricity effectively and use it to power facilities automatically. We are also building capacity to be able to manufacture this system in Nigeria. Currently, our facility is 70 per cent ready. We are going to be the first African country to be a lithium base integration plant.

    “The first phase of the investment is running into N7 billion, and this is just the beginning. To produce a lithium battery is a mega project. Unlike any other manufacturing system, you have components from different countries for manufacturers.”

  • Proposed tariff hike

    •Govt should not succumb to undue pressure from electricity firms

    Once again, Nigerians are confronted with the question of which comes first: the egg or the chicken, with the report that electricity consumers might soon have to pay more. Going by the report, the consumers may have to part with between N2.89 and N7.45 more per kilowatt hour (kwh) anytime from now. According to the report, the Nigerian Electricity Regulatory Commission (NERC), which is in charge of electricity tariff, has completed receipt of complaints on the new tariff after the expiration of a 30-day window. The review, according to reports, is necessitated by current economic realities. The proposed tariff however has to receive the blessing of the government before its implementation.

    As we have always argued, we have nothing against tariff increase per se. After all, the power sector is not immune from the country’s economic vagaries, the exchange rate and all. Our disagreement however has to do with the issue of prepaid meters which the electricity distribution companies are reluctant  to give their customers, for obvious reasons. Yet, it was clear a long time ago that one of the most contentious issues in the electricity sector is that of appropriate billing of customers.

    Indeed, many Nigerians had expected that this would be sorted out as soon as the new investors took over. Unfortunately, more than three years down the line, the issue has persisted even as the arbitrary billing by the electricity distribution companies is being resisted by more Nigerians. We wonder why Nigerians make a fetish of nearly everything. In neighbouring Ghana, prepaid meters are found all over the cities and even in the remotest parts of the country. How come the meters have to become something we would be debating for more than three years?

    In our view, the Federal Government should have reviewed the contracts with the electricity firms a long time ago. They had shown early in the day that the challenges in the sector were beyond their ken. The ideal is for Nigerians to have constant supply of electricity but it amounts to double jeopardy for them not to have electricity and yet be made to pay for what they never used.

    The complaint of lack of funds by the distribution companies to buy prepaid meters would appear laughable given that the power sector was among the various companies, individuals and parastatals that donated N21.27 billion during a fund raising dinner organised by the Peoples Democratic Party (PDP) on December 20, 2014 in Abuja. Indeed, the power sector alone coughed up a whopping N5billion, in what former information minister Jerry Gana said was the contribution by his friends and associates in the power sector, to the campaign. This huge amount would have gone a long way in procuring many prepaid meters for electricity consumers at the relatively lower exchange rate at that time. How can companies that embarked on that subversive generosity now turn round to complain of lack of funds to run their operations? The donation to the Jonathan campaign was made public; who knows how many other such avoidable expenses the companies have incurred which they now want Nigerians to pay for through crazy bills?

    Much as we do not support the Federal Government turning itself into a Father Christmas for the electricity firms, we would readily support any reasonable assistance it could render to them if it is convinced they genuinely require such. For instance, the government should expedite action on the more than three million prepaid meters that it promised would soon be rolled out under its intervention programme.

    We are not happy that the distribution companies have continued to demonstrate a lack of capacity to tackle their problems. Rather than concentrate on service delivery, they have kept emphasizing increase in tariff as if that would automatically translate into improved power supply. It would be sad for the government to allow tariff increase without evidence of their seriousness to bill Nigerians only for electricity consumed. Firms in the power sector won’t have any motivation to be efficient if they can always slam bills indiscriminately on their haples customers.

  • Tariff: Appeal Court rebukes judge for denying NERC fair hearing

    Tariff: Appeal Court rebukes judge for denying NERC fair hearing

    •CJ ordered to re-assign case to new judge

    The Court of Appeal in Lagos yesterday came hard on a judge of the Federal High Court, Justice Mohammed Idris, for denying the Nigerian Electricity Regulatory Commission (NERC) of fair hearing in a suit on electricity tariff increment.

    It held that the judge, who heard the case and restrained NERC from hiking tariff, violated the appellant’s right to fair hearing and thereby committed “a grave error”.

    “The trial court accorded undue reverence and relevance to technicality. The era of technical justice is gone in our courts. Substantial justice is key,” the Court of Appeal held.

    It ordered the Chief Judge of the Federal High Court, Justice Ibrahim Auta, to re-assign the case to a new judge for adjudication.

    Activist-lawyer Toluwani Adebiyi sued NERC over a planned increase in electricity tariff.

    He argued that tariff could not be increased when there were constant power outages and exorbitant estimated bills.

     

     

     

     

     

     

  • Electricity tariff: NERC loses bid to halt judgment

    Electricity tariff: NERC loses bid to halt judgment

    Justice Mohammed Idris of the Federal High Court in Lagos has refused an application by Nigerian Electricity Regulatory Commission (NERC) to stay execution of the judgment barring tariff increment.

    The court, on July 13, declared illegal the upward review of electricity tariff.

    It ordered a reversal and restrained NERC from further increasing the tariff, except in compliance with the Electricity Power Sector Reform Act 2004 (EPSRA).

    “The upward increment in tariff was hasty and procedurally ultra vires,” said Justice Idris.

    NERC appealed the judgment and asked Justice Idris to make an order suspending execution.

    Justice Idris refused the application to stay judgment, describing the application as “unreasonable, lacking merit and therefore dismissed”.

    Activist-lawyer Toluwani Adebiyi challenged NERC’s bid to increase tariff in a suit of May 25 last year, following which Justice Idris granted an order barring tariff increase until the substantive suit was determined.

    But before the suit was determined, NERC and the electricity distribution companies (DISCOS), on February 1, increased the tariff by 45 per cent, which the court reversed.

    NERC and DISCOS have filed separate appeals before the Court of Appeal, Lagos Division, of which hearing will begin on January 9.

    Adebiyi prayed for an order mandating NERC to generate more power to meet the country’s power needs, and to develop a multiple long-term financing approach, sourced from banks, capital market, insurance and other sectors to finance the sector.

    The lawyer asked the court to mandate NERC to make available to Nigerians within two years, prepaid meters as a way to stop indiscriminate estimated bills.

    In a supporting affidavit, the plaintiff said despite NERC’s mission of “keeping the light on and to meet the needs of Nigeria for safe, adequate, reliable and affordable electricity,” most communities do not get more than 30 minutes of electricity supply daily.

    “The masses are paying an estimated and indiscriminate bills, ranging from N5,000 to N18,000, while spending an average of N15,000 to N20,000 for fuel to maintain generating sets weekly.

    “Businesses have collapsed, industries have closed down and residents cannot sleep comfortably at night due to inefficiency of our power industry.

    “Companies and commercial houses are groaning under throat-cutting power bills, which they are paying for, yet not getting benefits of such payment,” Adebiyi said.

  • Data tariff hike suspension: Sweeping dust under carpet

    Data tariff hike suspension: Sweeping dust under carpet

    Those opposed to data tariff hike has won a temporary victory over members of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) – the planned data tariff increase.

    But in the days ahead, stakeholders in the industry would face the grim reality over the sustainability of the status quo. Maintaining prevailing price regime means a lot to the industry, except of course things have to remain as they are.

    Experts have argued that things cannot remain the same in an industry considered as “dynamic, capital intensive and competitive.” As everyone awaits “the finalisation of the study on the determination of cost-based pricing for retail broadband and data services in Nigeria,” it is important to put the issues in their proper perspective once more.

    The Nigerian Communication Commission (NCC), through a letter, had directed the big telecommunication companies to increase their data tariff beginning from December 1. The letter was signed by the Policy/Competition & Economic Analysis Director, Miss Josephine Amuwo and the Legal Regulatory Services Head, Mrs. Yetunde Akinloye.

    The duo signed on behalf of NCC’s Executive Vice Chairman Prof Umar Garba Danbatta, who had on assumption of office in August last year, unfolded an eight-point agenda to drive the vision of the NCC. Among others, his agenda was to facilitate broadband penetration, improve quality of service, protect and empower consumers and promote fair competition and inclusive growth.

    The proposed hike in data tariff was to check the emergence of dominant operators in the data service segment and ultimately enhance broadband penetration into the rural area.

    It’s a journey that must start now

    The document further explain that the measure would provide a level playing ground for all players and protect the industry from massive predatory pricing and safeguard investment, ensure growth, and development and sustainability of the industry.

    In the letter, the NCC put the interim price floor for data services at N0.90k/megabyte (MB) for the big operators. The big carriers before this new development have been charging as follows: MTN 45k/MB, Globacom 21k/MB, Etisalat94k/MB and Airtel 52k/MB, putting the average at 53k/MB.

    The smaller operators and new entrants price per megabyte shows that Smile was charging 84k/MB, Spectranet 58k/MB and Natcom was charging 72k/MB. The average charge of this category was 71k/MB. The small operator were described by NCC as “one that has less than 7.5 percent of market share and a new entrant is an operator that has operated less than three years in the market”.

    Reactions to the new price regime were spontaneous from across the country, forcing the NCC to suspend the hike. Its spokesman Tony Ojobo cited a general outcry from Nigerians as reason for the suspension. He said the NCC new position was taken after due consultation with industry stakeholders.

    Among critical stakeholders that kicked against the hike were members of the National Assembly, Trade Union Congress (TUC) and the National Association of Telecom Consumers (NATCOM). Nigerians also took to the social media platform to express their opposition to the hike.

    The Senate ordered a halt to the increase and set up a committee to further look into the matter. The upper chamber promised to involve all the agencies connected to the matter in its investigation.

    However, ALTON expressed disappointment over NCC’s decision to suspend the proposed price hike. ALTON Chairman Gbenga Adebayo said the regulator’s action would be unhelpful to the industry, as data prices had already fallen to unreasonably low and unprofitable levels.

    He said the public sentiments expressed across the country against the hike were understandable, but that NCC’s intervention as a regulatory body should not be driven by sentiments.

    Ekanga Attah, a Nigerian who resides in Ghana, in a publication by The Cable reacted thus: “inasmuch as I don’t support the increase in tariffs, but we have to understand that data (and goods in general) is still relatively cheaper than in most other countries.

    “I bought 6GB on Vodafone Ghana for 90 cedis (N9000) and petrol cost 3.69 cedis (N369) per litre while a bottle of star which is manufactured here in Ghana costs the equivalent of N500 while every other commodity cost twice or thrice as much as in Nigeria while the salary scale is equivalent to that of Nigeria as I learnt due to heavy government taxing which makes me want to run back home.

    “So, I know that the government is making some kind of miracle because bigger economies exposed to our type of shock like Venezuela and to some extent, Saudi Arabia, are actually experiencing total upheavals.

    “And to think they still have to do all this with Northeast in total ruins while catering for about two million Internally Displaced Persons (IDPs). So, I would say at this point in time we should shoulder the shocks and ride it out because it could have been so much worse.”

    Again, the planned increase in data tariff brought into the front burner the issues of infrastructure development and expansion in the industry and the imperative of quality of service. Would Nigerians prefer poor quality of service such as slow networks to improved quality and fast network service?

    Would a reasonably justified hike at a period of recession not be an incentive to industry operators who are also facing the challenge of sourcing foreign exchange in the face of depreciating naira value?

    Industrial operators also face the challenge of equipment shut down and vandalism, yet, the base stations are powered with diesel in the face of electricity supply gap.

    The NCC had rightly argued in a document obtained by The Nation that chief among the reasons for the reintroduction of the price floor was that  “some service providers were actually pricing their services below cost, a situation which could spell doom for the industry”.

    The ALTON president had warned about the unsustainability of keeping the prevailing price regime. His outcry might be seen as a cry to protect his members, but his warnings that “if the matter is not urgently addressed, it could lead to deterioration in the quality of data services across all networks and attendant poor quality of experience of users,” should not be ignored.

    An official of the NCC said “it is also in the interest of consumers who have stake their hard-earned income on data purchase to get quality service in return. Or of what benefit is a data purchased at cheaper rate, yet, to download a two-hour movie takes as long as a day, leaving consumers frustrated.”

    The official also noted that attaching a 10-page Curriculum Vitae in a Cyber Café could be as slow and time consuming, the pains and frustration of not getting it done at all after buying a 1.30-minute airtime could be  nightmarish.

    “The hike in data tariff, he further argued should be a win-win situation for all stakeholders in the industry. Whether it is now or later, the choice is before all the stakeholders”, the official who pleaded for anonymity explained.

    An industrial player also said that “ for those who do business with data, service quality is imperative and irreplaceable.  This could be a different ball game all together for other consumers, however, the NCC is better placed in the long run to chart a course that would be more beneficial to all.

    “Good that the NCC had developed a culture of consultation and openness to ensure justice, and fair-play by putting all the cards on the table, its regulatory functions to ensure the growth and development of the industry remains sacrosanct in the days ahead.”

  • Killer tariff

    •Federal Govt should assist local textile firms to compete favourably

    The charge by the textile manufacturers’ body – the Nigerian Textile Manufacturers Association (NTMA) – that local industries actually pay higher tariff than their international counterparts for the nation’s gas, although hardly surprising, merely exemplifies one of the more familiar paradoxes at the heart of the nation’s failed quest to develop its industrial base.

    Summing up the textile manufacturers’ dilemma to journalists in Abuja, NTMA Director-General, Hamma Kwajaffa stated: “The price of gas supplied to the local industry is pegged to the American dollar and was not reviewed after the drop in global oil and gas prices.

    ”The current domestic tariff at $7.38/mmscf is three times the price of gas in the international market. There is a need to review the tariff on gas supplied to the industries in naira, which should be affordable.”

    It’s hard to imagine that the Federal Government would require local industries to pay $7.38/mmscf at a time the international price of gas is no more than $2.5/mmscf.

    What is the basis for the differential? The need to fast-track development in the gas sector or what?  Shouldn’t the need to spur development in the gas sector be balanced with the concerns of the real sector already choking and chaffing under the inclement operating environment? Why subject a sector – long considered as endangered – to a price regime that is neither equitable nor fair, particularly at this time? Even if we concede that the price of gas, like crude oil, is dollarised, couldn’t a case have been made for the manufacturing sector and the textile sector in particular to ensure that the various initiatives being undertaken to revive the sector is not left to flounder? Today, we do know for a fact that the power sector enjoys some concessions on gas prices. Why not the textile and other sectors considered as equally strategic to the nation’s current plans to diversify the economy and create jobs?

    We say this because the textile sector is perhaps like no other both in terms of the capacity to create hundreds of thousands of jobs and also in terms of its capacity to save scarce foreign exchange. It has been said that its turnaround has the potential to save the nation the annual outlay spent on textile imports currently put at $4bn in addition to the ECOWAS market of 175 million people waiting to be served.

    As for the position of the manufacturers on the practice of pegging of the cost of gas locally to the American dollar, that position deserves no less sympathetic hearing. Indeed, the manufacturers’ argument that the dollar-pegged tariff has not only made the commodity unaffordable to local businesses but is in fact counter-productive makes eminent sense in an environment dominated by the influx of cheap textile imports from Asia.

    As against the scenario which obtained two months ago when the exchange rate was fixed at N197-N199/$, the plunge of the naira to the N314 –N320 band has meant some 60 percent increase in naira costs to the local manufacturer. For a sector already reeling under the combined weights of infrastructure deficit and terrible government policies, will the time ever come when the sector will be helped to compete?

    It should not be beyond the imagination of the Federal Government to find accommodation for the operators to mitigate the effects of the fluctuating currency. It should in fact do so without further delay. To leave the operators to the vagaries of the currency movements is to render nugatory the modest gains of previous initiatives.

    For a Federal Government sworn to create jobs and diversify the economy, saving the textile industry has become a task that must be done. The industry needs cheap energy – electricity and fuel – to attain the competitive edge; favourable fiscal policies to stimulate activities and measures to curb if not totally eliminate the influx of smuggled textiles. More than anything, the industry needs government’s help to overhaul the value chain.

  • Govt ‘ll respect court’s tariff decision, says Fashola

    Govt ‘ll respect court’s tariff decision, says Fashola

    The Minister of Power, Works and Housing, Babatunde Fashola yesterday reacted to the recent court judgment which outlawed the 2015 electricity tariff increase of distribution companies (DisCos).

    He said Nigeria will play by existing rules governing her power sector at the same time respect the rulings of her courts.

    He spoke in Abuja when 14 solar power investors signed their respective Power Purchase Agreements (PPAs) with the Nigeria Bulk Electricity Trading Plc (NBET) for the building of 1,125 megawatts (Mw) solar stations in 11 states.

    Justice Idris Abubakar of a Federal High Court in Lagos had overturned the tariff which was approved for the DisCos by the Nigerian Electricity Regulatory Commission (NERC).

    According to him, even though the court disbanded the tariff and NERC was contesting it, the government will maintain its dual obligation to protect electricity consumers and operators in the sector.

    The minister said electricity consumers in the country must come to the reality that the rates charged by the DisCos in their respective networks will never remain permanent.

    He said they will continue to respond to extant economic realities and indices from which they are calculated. He noted that they can either go up or come down depending on these indices.

    He stated that Nigerians erroneously believed the 2013 privatisation of the power sector was going to bring an immediate end to the sector’s challenges and dearth of public electricity in the country.

  • No tariff hike, says NERC

    No tariff hike, says NERC

    The Nigerian Electricity Regulatory Commission (NERC) yesterday said it had not receive any request from distribution companies (DisCos) for a 100 per cent tariff hike.

    A statement endorsed by its Head, Media Unit, Michael Faloseyi, explained that the Nigerian Electricity Supply Industry (NESI) said it was not contemplating any tariff increase as none of the industry operators is pressing for 100 per cent increase in electricity tariff.

    This clarification, according to the statement was due to a media report (not The Nation) that created the impression that NERC was considering applications from DisCos requesting for 100 per cent increase in electricity tariff.

    The statement reads: “Contrary to this wild and speculative media report, NERC has not received any request for 100 per cent increase in tariff from any electricity industry operator as most of them are at this moment pre-occupied with the challenges of improvement in service delivery imposed on them by the existing tariff regime.

    “The Commission as well as the industry is responsible enough to appreciate the state of the economy, level of power generation, how Nigerians are coping and would, therefore, not make any decision that could further aggravate the challenges faced by the power sector and the economy.

    “Critical stakeholders in the economy are further advised not to be quick in joining the fray by reacting to baseless media speculation thereby lending credence to rumours and wild imaginations.”