Ikeja Electric urges consumers to embrace cost effective tariff

The management of Ikeja Electric (IE) on Monday urged electricity consumers to embrace a cost effective tariff that would enable the company to sustain effective services.

The News Agency of Nigeria reports that IE appeal is contained in a statement issued in Lagos and signed by Pekun Adeyanju, assistant general manager, public affairs.

It stated that Abiodun Ajifowobaje, CEO, IE, made the call at a two-day consultation on tariff review with stakeholders and consumers.

It said the forum was designed by Nigerian Electricity Regulatory Commission (NERC) to determine new tariff structure.

“Instead of NERC to fix the new tariff for electricity consumers, the distribution companies (DISCOs) now consult consumers and come back for approval,” he said.

The statement described the DISCOs as daily collectors, adding that the bulk of the monies collected went to Generating Companies (GENCOs) and the Transmission Company of Nigeria (TCN).

“Out of every N100 collected from our consumers, only N15 goes to our pocket. We pay N65 to GENCO and N15 goes to TCN while others like NERC will share N10; we are only left with N15 out of which we pay our workers salary and replace faulty equipment.

“Because we do not have a cost reflective tariff, most of the DISCOs have not even paid the other chain. Due to crisis of litigation against the proposed tariff review, we have met with the Vice President, Mr. Yemi Osibajo, on the issue.

“The Vice President has called on DISCOs to go and negotiate with consumers and come back with good reasons for the tariff review,” he said.

It urged consumers within the zone to be objective in dealing with the issue, adding that it would be difficult for the company to obtain loan from banks if they did not have cost effective tariff.

The statement said Olurotimi Oduntan, director, Association of Nigerian Electricity Distributors (ANED), noted that energy was being subsidised by the Federal Government before it was privatised.

It said there were gaps in the business because they were still operating the last tariff based on exchange rate of N158/$, while a dollar was around N200.

It said that due to the current tariff structure, DISCOs were not making any profit and if things continued, the power business might collapse.

It said the purpose of the forum was not to increase the current tariff but to open book and go through them together.

The statement urged consumers within the zone to take the advantage of the forum to find an amicable tariff that would make the consumers and the investors happy.

It stated that Aigbe Olotu, IE director of finance, said six active members of the value chain were being paid money from what they collected at the end of the month.

According to it, 90 percent of what was used to produce electricity supply was in dollar and the Central Bank of Nigeria official rate for power sector had increased to N198/$.

The statement also identified three factors responsible for the gaps in the business to include cost of gas, exchange rate and inflation rate. It said that in spite of the increase, the tariff remained the same.

According to the statement, some consumers in communities under the zone were using 28 per cent of their energy illegally.

It said DISCOs were losing more than N11 billion monthly, adding that if it continued, they would run into difficulty. The statement stressed the need for the tariff to be reviewed, to stabilise power in the country.

It agreed with consumers on the elimination of fixed charge but said that the charges would be included in energy consumption by the consumers.

We have listened to consumers’ opinion on elimination of fixed charge, but this will be included in your energy consumption.

“At least you will know that if there is no power, you will not be charged. Everything will be based on energy consumption.”

It, however, assured consumers that if there was a rise in tariff, it would gradually come down with time.