Opinion: New Electricity Tariffs: Questions-Reuben Abati

By Reuben Abati  



The Buhari administration has given Nigerians a most unusual and disturbing New Year Gift, in the form of a proposed increase in electricity tariffs, enforceable from April by the Electricity Distribution Companies (Discos) and to be completed by the end of 2021, with the full backing of the regulator, the Nigerian Electricity Regulatory Commission (NERC). What happened? I am in a state of shock. What we knew, what we saw, before now, indeed what we were told, was that the electricity distribution companies were the weakest links in the electricity supply chain. They were accused of different infractions by the Ministry of Power, the Nigeria Bulk Electricity Trader (NBET) and the NERC which included, failure to abide by the provisions of the National Electricity Power Sector Reform Act (EPSRA), violation in particular of Section 74 thereof; failure to make due remittances to the Bulk Trader resulting in huge debts that had become a problem for the sector, and failure to comply with the metering system. 


By October 2019, the NERC had served notice that it was prepared to revoke the licenses of the 11 Discos, should they fail within a 60-day deadline, to give reasons to the contrary in defence of their continued presence in the electricity market. The standard official line was that the Discos were incompetent and ineffective, making the value chain difficult for both the Transmission Company of Nigeria (TCN) and the Generating Companies (GENCOs). The DISCOS insisted that they had done nothing wrong. They complained about (i) the huge cost of doing business in the sector; (ii), the failure of government to enforce cost reflective tariffs in line with the Multi Year Tariff Order (MYTO); (iii) electricity theft, (iv) the non-availability of gas due to vandalism, (v) government’s refusal to engage with stakeholders in the sector and (vi) they alleged that government is the biggest debtor in the market due to the refusal of government departments and agencies to pay electricity bills.

The big take-away for me was the persistent threat by the Federal Government of Nigeria that the DISCOs will be scrapped, or that their licenses will be revoked and re-assigned. It was said quite loudly that the current owners of the licenses got involved in the electricity sector not because they have the technical know-how or the financial muscle, but simply because they were close to the Jonathan administration, which accelerated the power sector reform process. Cast in that shape, the electricity sector became part of the unending navel-gazing, Jonathan-caused-it card that has been consistently played by the Buhari administration.  


What is shocking however is that the decision to increase electricity tariffs raises more questions than answers. On the surface of it, the Federal Government and its agents have capitulated to the DISCOs. How and why? At what point did the Federal Government buy into the argument of the DISCOs that the most important challenge in the electricity sector is the payment of cost-reflective tariffs? And how was the 77% increase arrived at, with consumers in the South East having to pay more than the rest of the country? Is this a case of ethnic discrimination? Do consumers under Enugu Disco use more electricity? What formula determined the new proposed rates? Well, they tell us it is all based on “changes in macroeconomic variables and available generation capacity”. Please, what does that mean in common man’s language? We have also been told that the proposed tariff hike is a retrospective adjustment to make up for revenue shortfall for the DISCOs from 2016 -2018. So, should the consumer be punished for the regulator’s failure to respect its own enabling Act?  And by the way, in the last four years, electricity tariffs have increased by about 300%. 


What we see is an excessive emphasis on revenue and profit by those in charge of the service delivery sectors of the Nigerian economy in general.  Nobody cares about the consumer. On all fronts, the Nigerian consumer is left unprotected. He or she is perpetually served the short end of the stick, and violated without consultation or respect for his or her right to be heard. The electricity sector is one of the most inefficient sectors in Nigeria. The national grid collapsed more than 10 times in the year 2019. Every month, we were told that gas pipelines had been vandalized. The DISCOs complained endlessly that they were having problems, but they were merely giving excuses. The regulator towards the end of the year introduced a compulsory metering policy and urged consumers to get properly metered to avoid the menace of estimated billing and the grand corruption that comes with it The DISCOs resisted the metering policy and virtually either refused to support it or adopted measures to frustrate it. They circumvented the terms of the policy. Today, most consumers of electricity remain unmetered. They do not enjoy efficient service. They are billed on the basis of some nebulous categorization called “status.” What “status”? The owners of  Yola DISCO pleaded force majeure and threw in the towel, but other DISCOs continue to operate without offering the people premium service. This has angered customers across the country. In Benin, the people once carried placards against the electricity distribution company, the BEDC. In other parts of the country, DISCO officials have been beaten up and given a bloody eye. 


On top of it all, the proposed increase in electricity tariffs is insensitive to the feelings of electricity consumers. Many Nigerians insist that they are willing to pay for electricity if they get it on a regular basis – for now, we are a nation in darkness. The people want transparency – the pervasive estimated billing system does not promote that, the DISCOs simply charge as they wish on the basis of nebulous factors. The people want meters, but nobody is taking that seriously. The timing and announcement of the proposed increase are also unfair. It is an unkind New Year Gift to a people confronted with a year of more taxes, with Value Added Tax jumping from 5% in 2019, to 7.5% in 2020 along with other taxes under the Finance Act of 2019. Nigerian workers expect that the increase in the new national minimum wage will be fully implemented in the year 2020, but it is obvious as we enter the new year, that the new minimum wage has already been wiped out by increased inflation and taxation. It is ever so convenient for government to punish the common man. In other countries, governance is aligned to the people’s interests and welfare. In Nigeria, our governors seek to inflict pain and punish the people. 


The opaqueness in the electricity sector is another problem. It promises to be worse than what we have seen so far in the oil and gas sector and the inefficiency of the oil corporation, NNPC. We are told on one hand that electricity tariffs will go up in April, while at the same time, the regulator announces that the Federal Government will underwrite N544.8 billion Electricity Tariffs Shortfall in 2020. How? Is that a subsidy? And if so, is there a provision for it in the 2020 Budget? N544.8 billion? How was that figure arrived at? 


The Federal Government says the intended increase in electricity tariffs is meant to get the sector back on track. Taxing the poor and the impoverished is not the best way to get anything back on track. The electricity sector is in urgent need of a general review and reform, and there are many issues to be addressed. Cost reflective tariffs under the MYTO regime may make the investors happy, but making consumers happier and protecting their interests should be the priority of government. Will increase in tariffs translate into efficiency? I doubt. Efficient service delivery is important. Will government agencies, the biggest debtors in the electricity sector now pay their debts? We don’t know. Or has there been a quid pro quo at the people’s expense? Is government planning to write off the debts of the DISCOs, and forgive their sins? What has happened to the plan to revoke operational licenses in the sector? Too many questions. But that is Nigeria for you. Nothing is ever straight-forward. 

II: The Pope And The Woman He Slapped

On New Year’s Eve, December 31, 2019, Pope Francis slapped a woman’s hand as she clung to him, and grabbed him while he was making the rounds greeting pilgrims at the Vatican. The following morning, the Pope apologized for what he called “yesterday’s bad example”. The footage of the Pope, freeing himself from the woman, with a scowl on his face, has since gone viral, but I am pleased that there are more people in support of the Pope than against him. Significantly, there has been no outrage.  The Pope’s apology came swiftly in less than 24 hours but he actually didn’t need to apologize because he did no wrong. 


What is established is that the Pope, often decorated with the toga of spotlessness, perfection and sainthood is human after all. He is like us. He is one of us. Like everyone else, if he feels threatened or unsafe, he will try to protect himself. The Pope was reacting to an invasion of his space. It is fine to shake hands but some people don’t know when a handshake sends a different signal. They grab. They linger. Women probably understand this better. The moment a handshake becomes an unwanted and unwelcome gesture; the other party is bound to recoil in horror or anger. That is precisely what the Pope did. He slapped the woman’s hand twice and freed himself. 


 I do not agree with those who argue that this is an indication of lack of clarity about Church teaching or that it is a case of “violence against women.”  In any case, the Pope’s hand swat was just a mere tap. This wasn’t a case of an Anthony Joshua slapping an over-eager Asian woman at St. Peter’s square. Where was Vatican Security by the way? In his Angelus remarks on January 1, the Pope delivered a message of hope and preached about “violence against women.” He has been accused of hypocrisy for that but his critics are again unfair to him because the equivalence that they seek to establish with the event of the night before is false. 


For me, by offering an apology, the Pope sets a good example and tone for the new year and decade. He reminds us of a value that is increasingly missing in social relations between the powerful and the ordinary in our world. The Pope is leader of over 2.1 billion Catholics in the world. He controls minds and imaginations. To see the head of such a large congregation getting angry in public, and even getting “physical”, is a reminder of the commonality of human emotions, but his apology in an age when many, especially the powerful and the privileged have lost the capacity to say “I am sorry, I didn’t mean to do that” is the most ennobling aspect of the incident. When last have you as a person, tried to say: “I am sorry”? In today’s world, we rarely apologise for the gaps between acts and intentions. We don’t care enough about the feelings of others. People are just intentionally offensive, be they leaders or followers – and that is why the world is such a troubled place today from Ukraine to Crimea, Iran, Iraq, Syria, Turkey, Israel, Afghanistan, Saudi Arabia, Venezuela, North Korea and the United States. Even when some people try to be contrite and they offer apologies, they sound more like Prince Andrew of the United Kingdom making empty noise about obvious wrongs, or like Jeremy Corbyn’s hollowness on anti-Semitism. 


In this matter, we have focused more on the Pope, perhaps understandably. But let the point be made: that the woman who grabbed him is an archetype for followers who do not know their boundaries. Ordinary people tend to cling to leaders, particularly religious leaders. In the Bible, Luke 8: 40-49, the people crowded and pressed against the Lord Jesus Christ and a woman touched Him prompting Him to ask: “Who touched me?” Someone touched me, I know that power has gone out from me”. These days, the people overdo it, because they believe that their salvation lies with that touch, that encounter with the man of power or the symbol of divine authority.   Many Christians worship Man rather than God. But it is perfectly normal for the Pope to act like a human being and good for all of us to see that he is just like “us”.   


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