Why the new tariff did not give us electricity
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The power supply in Nigeria has been appalling lately.

Not that it was ever great, but it’s worse than usual. But this time, excuses and explanations from the Ministry of power and the Nigerian electricity regulatory commission (NERC) won’t cut it.

 

Key takeaways

  • The service-based tariff (SBT), introduced in September 2020, is the most significant power sector reform since privatisation in 2014. It allows distribution companies to charge tariffs based on the number of hours of electricity customers get.

  • Like privatisation, implementation issues have significantly affected the SBT’s success. 

  • But, despite the SBT’s shortcomings, there has been some improvement in the power sector’s performance and liquidity situation. 

 

Against the backdrop of Nigeria’s persistent power problems, the Service-Based Tariff (SBT) was rolled out in September 2020. It was supposed to be a new era for the Nigerian electricity supply industry (NESI). It was the first major reform in the power sector since privatisation in 2014. But, one thing we do very well in Nigeria is talk about “new dawns” that never seem to last.

The SBT regime means that the number of hours of electricity supply you get would be tied to the tariff charged. People getting 20 hours and above would pay the highest tariffs, while people with 4 hours of electricity supply would pay the least. Essentially, the SBT should incentivise discos to increase power supply to improve their earnings and we’re going to unpack how this works. For customers, this means that if you’re getting less than the number of hours you are charged for in your tariff, you should be compensated.

Fast forward to 2022, and two tariff increments later, I supposedly live in a Band A area which means I pay the highest tariff and should be getting at least 20 hours of electricity. But, even before the recent problems started, it was rare for me to get my 20 hours of electricity consistently for up to seven days in a row. And it’s the same for a lot of people across the country.

So, what was the Service-based tariff's objective, what went wrong and who’s going to compensate us? 

Let’s start by understanding what the SBT is and why it was even necessary, to begin with.

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Noelle Okwedy

Noelle Okwedy

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