.NEW TARIFFS: Where Fashola, NERC And Power Companies Erred

The new tariffs which became effective penultimate Monday have generated much controversy and still continued to attract disapproval and negative responses from different quarters particularly from the civil societies and labour unions in the country.

At the moment, the polity is heated and set for show of supremacy between the power companies and the masses; with threats of picketing; shutting down the power stations or reversal to its former tariffs.

Remarkably, the Minister of Power, Works and Housing, Mr. Babatunde Fashola, SAN and the power companies have appealed to the general public calling for understanding and patience, and promising that market forces would inevitably push the prices down.

However, the labour unions on the other hand insisted that tariffs increase are unacceptable particularly at the moment that power supply has not clearly improved in the country.

By the new tariffs, electricity consumers have been programmed to pay more per kilowatts and if metered, could aggregately pay lower since the reform would eliminate the usual arbitrary bills imposed on the consumers. Sadly, these are coming at a time price of commodities have all gone up due to the high exchange rate.

Already, the distribution companies (DISCOs) have subtly introduced new tactics with which they use to frustrate the intending consumers from migrating to the prepaid meters. These they do by doubling the existing ‘crazy bills’ in such that even if the prepaid meters are supplied and installed, to clear the arrears prior to migration would become another challenge to the subscribers and would keep them to remain on the estimated billing systems until the accumulated arrears are cleared.

As I write, there are numerous consumers who have been provided with Pre-paid meters but without handing over the recharge points due to arrears of unjustifiable ‘crazy bills’ which in most cases run in hundreds of thousands of naira and with a condition that the estimated debts must be cleared.

Notwithstanding, the federal government deserves commendation for determinedly embarking on the reform which if well implemented would certainly transform the economy as well as boost job creation in the country. The initiative by Fashola was excellently thoughtful and should be encouraged by the public.  

However, where the Minister and the NERC in collaboration with the power companies got it wrong are obviously clear and advisedly should as soon as possible be reviewed to reflect fairness and transparency.

Firstly, the new tariffs cannot be implemented against consumers without prepaid meters installed on account of the existing fraudulent-estimated billing system which presents ‘crazy bills’ to the helpless customers. If prepaid meters are not installed, the tendency of doubling the present unjustifiable crazy bills is high and such bills will pile up to constitute a further barricade to the consumers that would be willing to migrate. Based on the new tariffs, for example, a consumer hitherto imposed with a monthly estimated bill of N10,000 is likely to be billed over N25,000 at the end of the month of February by the red-eyed DISCOs on the ground of the tariffs increment now effective.

Secondly and essentially, the N750 fixed service charge cannot remain in place alongside the new tariffs regime putting into cognizance that the cardinal objectives of any reform all over the world is to empower the common man in the society and boosting of the economy. The implementation of the new tariffs without expunging the fixed service charge which is accumulative is inimical and unacceptable. The reason is simple. The privatization is aimed at liberating the sector in such that the power companies do not continue to impose bills and “services” on the consumers. Hence, with the introduction of the prepaid meters which would restore the consumers to their rightful positions as the boss would be defeated if by the fixed charge, the consumers are indirectly forced to  pay for services they didn’t use. The whole idea of the prepaid meter is that a consumer can chose to use the services and not to use it. Unfortunately, by the fixed service charge, if a consumer chooses to use other sources of power, perhaps more favourable to him, the fixed service charge will keep accruing against his account.

Thirdly, the reform which allows the existing customers who already paid for Analog meters to still pay for the prepaid version prior to migration despite the fact that the meters whether analog or digital are the properties of the DISCOs, indeed is harsh and unfair to the consumers. Power companies cannot operate different set of rules in the same society. As the meters are among the tools it uses on its services, they should source for funds and install the prepaid meters to the existing customers as replacements rather than the present practice they embarked upon. It should be note that the prepaid meters which consumers are being forced to buy afresh cannot be relocated along with the purchaser on moving from the area it was domiciled, hence cannot be included among his personal effects.

Call it reform or whatever, what is important is to liberalize the sector in such a way that even if the power companies chose to increase the tariffs in triple to what they are presently, the consumers can competently consider all the available options which includes switching over to inverters, generators or even lamps without having any bills accrued from the distribution companies. With the present arrangement, all it means is that every consumer must continue to pay at least N750 even if you couldn’t meet up with the new tariff. The overwhelming goal of a prepaid meter is to put the consumers in control and not to be forced to adopt whatever the DISCOs offered. Anything short of this would certainly defeat the objective.

Having said that, it is pertinent to note that though the economy is at the moment passing through some crises due to the negligence over the years of the previous administrations whose sole aim was to loot the economy, the increment in the tariffs is consistent with the global practices wherever privatization is newly implemented. The tariffs would eventually drop on its own through the forces of market. What should be the concern of the consumers is to remove all the impediments including the ‘crazy bills’ which makes it difficult to migrate to the prepaid metering system.

Analytically, it should be mentioned that the bone of contention ought not to be on how much the tariffs stand at but that all charges including the service charge should be embedded in the bill as adopted by the GSM companies. That would empower the consumer to choose whether or when to patronize the power companies by using their services as GSM customers do not pay for service charges outside the bill. This means that if by the tariff increase, a consumer elects not to use it, no bill would pile up against him.