Do our laws support our economic well-being?

By AKINTOLA OMIGBODUN There is a group of persons in Benin-City, Edo State who have staged protests about the low-level of power supply and the fixed charges paid by the customers of the Benin Electricity Distribution Company, BEDC.

The group is the Benin Forum and it has carried its protests to the Edo State House of Assembly and the Edo State Governor, Mr. Adams Oshiomhole. The protests are essentially against the concept of a fixed charge separate from the energy charge for electricity consumed. At present, customers of the BEDC in residential R2 category pay N750 as a fixed monthly charge and N11.37 per kiloWatt-hour, kWh, for electricity consumed. However, as from 1 June 2014 the customers of BEDC would pay N1,500 as fixed monthly charge and N11.94 per kWh as energy charge. The charges indicated above were specified in the Multi-Year Tariff Order, MYTO, which the Nigerian Electricity Regulatory Commission, NERC, issued and published for the cost of electricity sold by distribution/retail companies for the period 1 June 2012 to May 31, 2017. NERC’s authority for the tariffs in the MYTO is the Electric Power Sector Reform Act, 2005. This Act requires NERC to develop competitive electricity markets, to enforce such matters as performance standards, consumer rights and obligations amongst other things. Consumers believe that the concept of the fixed charge is unfair and we should anticipate the strong reactions of the customers of the BEDC when the fixed monthly charge is doubled after 1 June 2014. Besides the BEDC, there are reports that the Abuja Electricity Distribution Company, AEDC, has indicated to NERC that AEDC’s operations are being carried out at a loss. However, this is the opportunity for NERC to get the electricity distribution companies to reduce the losses in their distribution networks. With respect to the BEDC, NERC should direct the BEDC to invest its additional revenues from the fixed monthly charges in specific projects which would be monitored by the consumers and NERC. The electricity distribution companies would have to look for power from outside the national grid if there is to be an improvement in the supply situation. Before now, consumer complaints about electric power supply were rebuffed with the claim that the consumers were enjoying a discount or subsidy on the true cost of service provision. With the removal of subsidies to consumers, we should ask why we are still not getting results from the power sector. We have always had inadequate gas supply and this situation prompted the Federal Government of Nigeria from about 2004 onwards to site some new power stations near the sources of gas supply. These new power stations are not in operation so we are not in a position to know whether their problems are the lack of gas or the lack of connection to the national grid. The various consortia that acquired majority shareholding in the distribution companies cannot claim that they did not understand the risks when they chose to bid for the majority shareholding. The tariffs in the MYTO are at best a guide to a future that may not be fulfilled. The banks that gave the loans to the consortia for the acquisition of the majority shareholding in the distribution companies may have done so in the belief that the Asset Management Corporation of Nigeria, AMCON, would assume responsibility for the loans in the event of the failure of any of the consortia to meet the terms of their loans. NERC should realize that AMCON leads right back to the consumer – the people of Nigeria. NERC should make the electricity distribution companies realize that they must not fail and that they can only avoid failure by having appropriate investment programmes for improving their networks and for provision of power from outside the national grid. - See more at: http://www.vanguardngr.com/2014/04/laws-support-economic-well/#sthash.E5oSdJ4T.dpuf