The Federal Government has said that it would be difficult to allow the 11 electricity distribution companies (Discos) charge new rates on the electricity that they supply to their customers across the country.
According to the government, the country lacked an accurate record of electricity consumers in the Discos’ networks or enough customers that are metered by the Discos.
Disclosing this during an interview with Channels Television on Wednesday, the Minister of Power, Works and Housing, Babatunde Fashola, backed the decision of the Nigerian Electricity Regulatory Commission (NERC) to hold back the implementation.
He added that the government wanted to give room for fairness and would do this by properly dimensioning the market.
He defended the policy by saying that it was impossible to have a fair tariff in an electricity market that had just about seven million households as its recognised customers out of Nigeria’s 180 million people,
He added that proper consumer enumeration was very essential to establish the true basis for determining tariffs in the sector, noting that the Discos would have to improve upon their deployment of meters to consumption points.
He argued that until these were done, approving a cost reflective tariff for the market might be difficult to achieve.
In his words, “We need to do something with the entire value chain, from tariff to metering to energy conservation, consumer education, to payment of debts by ministries and departments and ordinary consumers, and all of this are contained in the power sector recovery programme.
“Tariff is important. The agency that decides on tariff is the NERC, not the Ministry of Power, Works and Housing, and not the Minister for Power. The minister has no power over tariff under the law. When the last tariff was passed, I had no power, and didn’t approve it; it was NERC that approved it. All I had was an opinion which I expressed,” said Fashola.
“My opinion, as at today, is that before we can review tariffs, we should increase metering, we should also increase consumer audit to actually properly dimension the economy and see whether the unit cost is under-stated or over-stated.
“Because, if you have a market – an electricity market,where seven million households are all that is in the database as consuming electricity in Nigeria, I am not sure that data is correct. So, if the tariff is one naira and applied to seven million households, it is possible that if they are actually 14 million households, you may collect more without necessarily increasing the tariffs but properly dimensioning the market,” he added.
Fashola stated that he would like to see more consumer enumeration, consumer audit and identification. He also said that he would like to see more metering and more education, in order to properly dimension the market.
