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NEPA tariff hike again?
With the discontent raised by the January 2004 hike in tariff by the National Electric Power Authority (NEPA) yet to settle, the Authority is on the move for another upward review of its charges. In January, NEPA had increased the cost of one unit of energy from N2.60 to N4 for private, single phase metre (L1) consumers. The cost for the same unit of power for single phase commercial metre (L4) consumers was raised to N6.30 from N3.50. Consumers hooked to three-phase and industrial metres also had their tariffs jerked up from an average of N3.30 to N8.50 and above. For whatever reasons the electricity agency embarked on the roughly 400 per cent increase in tariff, improvement in performance and service delivery were scarcely part of them.
Reports said last week that on or before December 31, NEPA might raise the bills again. The Managing Director of the establishment, Mr. Joseph Makoju, reportedly told the House of Representatives� Committee on Public Accounts that the increase was to enable NEPA meet current challenges. The reason advanced for the tariff raise is that while the Authority�s monthly commitment is N7.5 billion, it is only able to generate about N5.8 billion per month. The new tariff regime is expected to come into effect alongside a fresh billing system called Multi-Year Tariff Order, whereby NEPA charges would take cognisance of such economic indices as inflation, exchange rate and cost of production. Makoju confirmed the non-availability of metres to half of its customers, a development he blamed for power leakages and outright theft of energy.
Since its establishment in 1972 as the sole electric power monopoly, with an installed capacity of about 5,000 Mega Watts, NEPA has consistently operated far below capacity. Today, the country�s daily power need is put at 6000 MW. Though power outage has become a way of life, the nation suffered nine total system collapse in 1999, when the President Olusegun Obasanjo government came to power. Institutional inefficiencies and corruption have not only hindered power generation, they have marred transmission, distribution and revenue generation. NEPA has also been a major drain on public funds. In 2000 alone, the Federal Government spent about $400 million, representing 13 per cent of its total capital expenditure on improving electricity supply. A nine-member technical board was then set up to raise power generation to 4000 MW in the short run, while the Bureau of Public Enterprises (BPE) was charged with privatising the power sector.
Quite unfortunately, none of these measures has significantly improved power supply in the country, as many private and commercial consumers still rely mainly on generators (at prohibitive costs) for electricity. Indeed, the Manufacturers Association of Nigeria�s (MAN) figures show that local manufacturers source about 59.43 per cent of their power needs from generators.
With such an unflattering score, therefore, business ethics demand that the monopoly ties its general revenue drive, especially tariff increases and billing, to improvement in electricity supply and service delivery. The common experience, however, is that metres, even where available, are never read. What now passes for electricity bills in Nigeria are cooked, arbitrary slips called �estimated bills.�
On what factual and moral premise can Makoju�s recent claim that only 24.5 per cent of Nigeria�s energy consumers pay their bill, when NEPA�s billing system is chaotic? It is quite distressing, indeed disappointing, that after five years in office, Makoju has not been able to sanitise NEPA�s arbitrary and corruption-prone billing process, despite his past repeated promises (as he has again pledged).
NEPA�s fresh plan to hike tariff may be its precipitate reaction to the FG�s recent resolve to stop funding it. Nigerians are, therefore, not deceived by Makoju�s Multi-Year Tariff Order. NEPA should brace up for stiff consumer resistance in an economy where, because of its inefficiency, the cost of energy is adjudged one of the highest in the world. Worse still, the Authority�s new revenue drive might end up enriching only its largely corrupt metre readers and revenue task forces. But what is particularly disheartening is government�s tardy approach to power sector reform. NEPA cannot be turned around and made to serve the nation�s electricity needs by injecting more funds into it. Its present unwieldy structure as a government-owned monopoly is the problem which must be decisively tackled by applying appropriate reforms. The nation�s economy will remain hostage to NEPA�s ineptitude until the Power Reform Bill is passed into law and implemented.
The Punch, Monday July 19, 2004
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