FG halts power tariff hike execution

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  •   NERC hangs MYTO’s major review report

The Federal Government has yielded to pressure from the organised private sector (OPS)’s as it halted the implementation of power tariff hike for one year, New Telegraph has learnt. The Nigerian Electricity Regulatory Commission (NERC), this newspaper understands, has, through Multi-Year Tariff Order (MYTO) review, already concluded works on the tariff hike.

This tariff increase would, however, not be implemented until after the next one year when the general elections must have been concluded, a source at the Ministry of Power, Work and Housing told this newspaper.

Rising under the aegis of the Manufacturers Association of Nigeria (MAN) and Network of Electricity Consumers Advocacy of Nigeria (NECAN), the OPS had earlier registered their displeasure when the Federal Government commenced the major review of MYTO process.

A correspondence exchanged between NERC and DISCOs sighted by this newspaper, showed that the Commission had, however, dump the biannual template used in tariff review for a monthly review as earlier demanded by those who, through $2.525 billion investments, bought over the defunct PHCN on Friday, November 1, 2013. “There will not be announcement and implementation of hike in power tariff until after the next 12 months,” the source said.

“Though works have been concluded by NERC on the review, the commission will have to hang the report because its implementation at the time is considered to be a big issue, which could swing directions of votes during the next polls.” This newspaper had earlier reported plans by Presidency to slam an embargo covertly on the implementation. “Now, that has come home to roost.

There will not be tariff hike until the next one year when elections must have been concluded,” he added. “NERC has, through the Minister of Power, Works and Housing, Mr. Babatunde Fashola, briefed the president on the completion of the MYTO review.

However, implementation of the order is not likely until after the general elections,” another industry source said. “The Presidency considers this tariff issue to be one of the major elements that could shift peoples’ decisions before and during the polls, hence, the embargo of the implementation is on the card as we speak.”

The NERC was, however, silent on the issues. Its website contains nothing relating to updates on tariff review while two MYTO contacts – Sharfuddeen Mahmoud and Aisha Mahmud, whose e-mail addresses were given on the website did not respond to mail sent to them as at the time of this report.

The Federal Government had, through the agency, on June 7, given a one-month notice for major stakeholders to feed it with their positions on the plan to change the period of tariff review from every five years to monthly or quarterly “in order to reflect current economic realities.”

President of MAN, Dr. Frank Jacobs, said on the side-lines of a stakeholders’ meeting in Lagos, that any move to review the tariff would worsen the woes of Nigeria’s economy, which is already suffering from 95 per cent tariff increase in 13 months.

Speaking through Chairman, Economic policy, MAN, Reginald Odiah, Jacobs told this newspaper that his group, which forms the larger chunk of the Maximum Demand Customers, was contacted by NERC and they completely objected to any review of MYTO.

He said: “What we know, which we want them to know, is that our budget is done yearly and any attempt to change the tariff of electricity to monthly or quarterly period, will affect our budget and worsen the harsh economic situation being faced by our members and the generality of Nigerians.”

MAN, which has membership strength of 3,500, he explained, is yet to recover from the last tariff hike and the planned review would chase out more manufacturers and drastically reduce their number in the country.

Stating that cost of power for manufacturing is exorbitant in Nigeria, the MAN boss said that China spends less than 10 per cent of its production cost on electricity, while its members spend 40 per cent of their production on electricity.

The DISCOs, however, disagreed with MAN and NECAN, insisting that the country deserves “cost reflective tariff,” which is not yet in place, to get the power sector working.

He said: “What we know, which we want them to know, is that our budget is done yearly and any attempt to change the tariff of electricity to monthly or quarterly period, will affect our budget and worsen the harsh economic situation being faced by our members and the generality of Nigerians.”

MAN, which has membership strength of 3,500, he explained, is yet to recover from the last tariff hike and the planned review would chase out more manufacturers and drastically reduce their number in the country.

Stating that cost of power for manufacturing is exorbitant in Nigeria, the MAN boss said that China spends less than 10 per cent of its production cost on electricity, while its members spend 40 per cent of their production on electricity. The DISCOs, however, disagreed with MAN and NECAN, insisting that the country deserves “cost reflective tariff,” which is not yet in place, to get the power sector working.

Adeola Yusuf

 

 

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