Power Sector Banding: A Deceptive Scheme Masked as Reform?

The Nigerian power sector has always struggled with systemic failures, coupled with corruption, and has billions of dollars to invest and numerous reforms. However, hostility of the public towards the new electricity banding system, which classifies customers from A to E based on the duration of power supply, is increasing. Nigerian consumers do not benefit with equivalent improvements in service quality; yet the system of this electricity pricing is seen as deceitful price manipulation as demand for spare parts are driven up while the electricity costs to consumers artificially inflated. Millions of people who are abused by what is termed government and DisCos feel sympathetic for the widespread power instability across the country.

 

Understanding the Banding Model: Bands A to E

The banding model was established by the Nigerian Electricity Regulatory Commission (NERC) in 2020 during the implementation of the Service-Based Tariff (SBT). The evaluation of the daily electricity supply duration is used to sort customers into different categories via this model.

- Band A: Customers receive 20 hours or more of electricity daily.

- Band B: 16 and 20 hours.

- Band C: 12 and 16 hours.

- Band D: Between 8 and 12 hours.

- Band E: Less than 8 hours of supply.

The supposed better service quality comes at steeply elevated electricity rates that have to be charged to customers belonging to higher bands. Does there exist any fact-based evidence in favour of the claim presented here? On further investigation it is found that the situation is not what it seems.

 

Disconnection Between Tariffs and Service

Nigerians widely demonstrate their frustration when the hours of electricity supply promised by the banding system theory fail to materialise. In a real situation, the Band A and Band B customers in urban and rural areas have long power outages that may last for many days. Residents from Band B or A categories, that is from various communities, say they access some electricity not more than four hours in a day.

 

Tariff Hikes Without Metering

A resident of Surulere Lagos in Band A classification, Mr. Emeka Obi, tells us that he finds the situation fraudulent.

In an interview with the resident, he stated that the electricity company puts them in Band A, yet no power was granted to them for three consecutive days. How is this Band A? It’s fraud!”

However, records have it that the trader is a member of the Band C category, which comprises of those in Osogbo Osun State.

All service users from Band A through to D experience poor quality service. All else is the same since the implementation of bands, with the one alteration being the price of electricity. It keeps going up!”

Such testimonies are not isolated. The phenomenon of power quality is fucked across Nigeria in all giant cities, Lagos and Abuja and in remote villages like (Kano and Akwa Ibom), there is spread of disaffection for power quality. The banding scheme is confirmed by public opinion as a manner for Tolaba [attempting] to take money from people disguised as reforms à la structure.

 

FG’s Hands Tied? Deregulation or Abdication?

The fact that prepaid meter installation does not exist across the whole country remains a severe threat. According to the NERC Q2 2023 report, metering has been able to reach only 5.6 million out of a supposed 13.4 registered electricity customers in Nigeria. Around half of electricity customers across the country are therefore affected by the estimated billing system since meters cannot be made available to these 60% of consumers.

This is because Nigerian consumers are forced to pay electricity bills with no basis in reality because of the absence of meters. DisCos can set high rates secretly, given the current system design, by exploiting the banding classification.

A group made of Nigerian Society of Engineers and Civil Society Action Coalition on Education for All or CSACEFA conducted an audit which found out that customers who do not have meters are billed between ₦40,000 to ₦50,000 for Bands A to C even when power supply lasts no less than 10 hours a day.

This declaration raises pressing questions:

- If the FG cannot increase tariffs, who is truly in control?

- Why have DisCos been able to unilaterally hike tariffs despite poor service delivery?

- Where is the regulatory oversight promised during the privatization of the sector in 2013?

Deregulation was supposed to minimise inefficiency and corruption through market forces, which would improve service quality and innovation. NCC (nerc) and other agencies have not provided sufficient regulatory guides to the DisCos, where they also achieved complicity in the DisCo's operations without any restraints.

 

Electricity as a Luxury: Impact on Cost of Living

In combination with the tariff increases, the banding system has very devastating economic effects. According to SMEDAN, 85 per cent of Nigerian employment represented by the small and medium sized enterprises is very affected. Thus, diesel generators allow businesses to survive as electro supply is unstable and bills are extremely high. The cost per fuel liter of operating the generator is ₦1,500.

Due to the unstable power situation, the healthcare system in urban and rural hospital zones is spending extra money to make backup power supply systems. In various establishments, from educational facilities to industrial plants and businesses on cold chain operation, their business is still ongoing with funds draining. Electricity became a standard utility that was converted into an expensive privilege applicable only on and off to particular numbers of consumers.

A tailor who does not want to be named in Lagos, said:

Three times in six months, the price of the product has been increased by the tailor. It is possible to spend more than ₦40,000 in a month in power consumption without enjoying any steady electricity supply.

 

Citizens Fight Back

But labour unions and civil society organizations strongly denounce the banding system, as well as the recent electricity tariff increases. Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) are strategising grand demonstrations should they not see proper consultation with stakeholders, as well as substantial improvement in services as Electricity price increase is announced by the Government.

Nigerians have been misled into understanding Adamawa’s banding system as ‘419 in disguise’ for the fact that electricity providers use technical terms to deceive and exploit Nigerians – The NLC has said.

Since the universal price structure without accountability is as advantageous for providers as it is for the public interest, every pricing system must depend on actual service delivery and needs to be completely clear and quantifiable.

 

What Next? Accountability or Anarchy

So industry experts recommend the following actions to deal with the increasing discontent of customers:

1. A government should prevent any increase in tariffs before 90% of meter installation.

2. Every band level should doubt auditing all supply records.

3. Engaged DisCos must be compulsorily penalised if they fail to hit their service delivery targets.

4. Before changing there, NERC has to involve paras CPC and consumer unions and civil societies groups in open consultations.

5. After deregulation, the regulatory oversight needs to possess increased power to ensure accountability standards.

The country is to stop with reform activities that bring no positive results, stop the privatization procedures that are not transparent, and stop policy initiatives that do not bring execution. Electricity, as a basic human need, becomes a fundamental right which is a force of national progress for the protection of lives and economic growth.

 

Conclusion

A fundamental breakdown of the system is the imbalances between electricity bills and real quality of service the Nigerian consumers get from the power sector, it is the mismatch. The fact that there is no accountability by the distribution companies (DisCos) in its operations has been evidenced by regulatory body NERC, which has remained unable to enforce such accountability. It is found that however increased prices occur, the service quality is getting worse to the extent that no substantial developments can be seen related to the rising costs largely experienced by Nigerians.

It hurts unmetered customers the most because, for the most part, they still get estimated billing, which most people view as exploitative. Yet, in deregulated sectors, these sectors should be transparent and fair, however, our actuality is that arbitrary billing plus weak oversight reigns. The so-called deregulation effort to instill competition and efficiency resulted in a powerless region where there is nothing held back in the hands of unregulated private operators and the system to which they give less trust.

If improvements are to take place in any substantial sector in Nigeria, transparent practices and strict accountability measures will be needed to link prices to actual service quality delivery. Until Nigeria carries out fundamental reforms, both universal metering and rigorous regulatory oversight, progress will be considered exploitation, not improvement, in the power sector. It should be the standard electric service and not an expensive yet unreliable privilege that the people of Nigeria should have been entitled to receive as their fundamental human right.