THE National Electricity Regulatory Commission's (NERC) proposed regime of 50-100 per cent increase in tariff is faulty, to the extent, at least, that it is based on an anticipated improvement in power supply. Scheduled to commence from January 2012, the controversial policy is aimed at shoring up the worth of a non-performing public company ' Power Holding Company of Nigeria ' to attract investors. Expectedly, the proposal has witnessed a groundswell of condemnation by operators of key sectors of the economy, the Labour movement and the citizens.Raising tariffs astronomically in anticipation of improvement in electricity generation and distribution levels by January 2012 is inappropriate. Can the NERC guarantee the anticipated improvement, or assure its sufficiency to satisfy consumers' The proposal is insensitive, and anti-people. It should be halted, until the company improves its performance to the satisfaction of consumers.Part of the Federal Government's roadmap for the power sector under its reform process is to have it absolutely commercialised to attract investors who will shore up capacity. Officials claim a review had become necessary as the country had failed to attain the 2008 target set under the Multi-Year Tariff Order (MYTO), a periodic five-year major review pack designed to moderate electricity tariff, including yearly review frameworks (The process was adopted under the Electric Power Sector Reform Act 2005). However, like most other government undertakings, the scheme has been faced with sustainability problems.Defending its action in favour of investors, a NERC commissioner, Dr. Abba Ibrahim insisted that no specific percentage raise had been determined, and that the plan was in response to investors' complaints that the tariff was too low, the lowest in the world. He cited inflation and exchange rate as two macro-economic indices used to determine a cost effective tariff, to guarantee recovery investments by investors.Chief executive of NERC, Dr. Sam Amadi also reportedly said at another forum that an approval of the plan would enable the commission to engage further with stakeholders and align the review date with the calendar of most businesses, especially those in electricity supply industry.The new rates may see the Residential Two category (with single phase meters) pay between N10.85k and N14.60 per kWh (kilowatt hour) as against the current N7.30k. R3 category customers who currently pay N11 may cough out between N16.50k and N22. Highest paying customers may move up to between N23.40 and N31.20 from N15.60 per kWh.It is instructive that the two minor reviews carried out between 2008 and now have failed to achieve optimum efficiency as envisioned by NERC. And there is nothing on ground to raise consumers' hope of any improvement this time. The last raise on July 1 took the rate to N10 from N8.50k per kWh. In the light of this, can NERC ensure a robust market, viable enough to attract target investors'By successfully selling the idea of a new tariff regime to the government, going by President Goodluck Jonathan's recent affirmation that there was no looking back, the commission is literally asking consumers to brace up to pay more for darkness.While a complete, faithful reform of the sector may attract Foreign Direct Investments (FDI) and create employment and business opportunities, it is difficult to reconcile claim that poor power supply is a function of poor pricing of electricity, and that a price increase is assurance for 'uninterrupted, quality electricity' supply.The government should listen to voices of reason by the Organised Private Sector (OPS), the National Association of Chambers of Commerce, Industry Mines and Agriculture (NACCIMA) and the Nigeria Labour Congress who have all rejected the proposed 50 per cent minimum tariff increase, based on its probable adverse effects on the economy and the social sector.As the OPS envisages, the move may stifle businesses, worsen the troubled industrial sector and culminate in mass sack of workers. The undue emphasis on pricing as a principal consideration in power sector reform is uncalled for. The country has not recorded any significant improvement in public power supply despite upward tariff reviews, and huge public spending in the sector in the past few years.Government ought to be worried about public summation that the greatest evidence of leadership failure is the embarrassing state of public power supply. In short, what the country is witnessing is a crisis created by failure of governance. There is no justification for a policy that will only compound the people's poverty and misery, by forcing on them an increased tariff to compensate an inefficient system. That is official fraud.Rather, those in charge of power supply should be ashamed that a country of 150 million people can only boast of 4,242 megawatts of electricity. The NERC's proposal can further undermine development objectives and the welfare of citizens. It is important to first push the right institutional framework for delivery of electricity, totally insulated from government bureaucracy. A framework that seeks to satisfy investors at the expense of consumers is inimical to the economic emancipation of the people it seeks to protect.
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