How Nigeria’s new service-based electricity tariffs are impacting consumers

Nigeria's electricity sector is undergoing a significant transformation with the introduction of a new multi-structure electricity tariff system. As consumers grapple with the implications of this new system, questions abound on how power distributors will effectively implement these changes. The CEO of Crown Interactive, Wumi Oghoetuoma, sheds light on the challenges and opportunities that lie ahead in a recent interview on CNBC Africa. Oghoetuoma emphasizes the critical need for transparency, communication, and accountability in ensuring the success of the service-based tariff system. The new tariff structure aims to incentivize power distribution companies (discos) to provide better service by linking the tariff to the quality of power supply. However, the implementation of this system presents various hurdles, including the lack of visibility and technology investment required by the discos. Oghoetuoma underscores the importance of data tracking services and technology adoption in driving the success of the new tariff regime. He cautions that effective communication and clear mechanisms for addressing consumer grievances are essential for the smooth operation of the multi-structure tariff system. With the discos facing challenges related to debt overhang and liquidity constraints, the transition to the cost-reflective tariff system could further strain their resources. The need for increased investments in infrastructure and technology to support the new tariff framework adds another layer of complexity to the situation. Despite these challenges, Oghoetuoma remains optimistic about the potential benefits of the service-based tariff system. He highlights the positive impact of the tariff on consumer behavior, noting that increased awareness of electricity usage patterns can lead to more efficient energy consumption. The shift towards a more customer-centric approach in the electricity sector is a step towards improving service delivery and enhancing consumer satisfaction. While the road ahead may be challenging, Oghoetuoma believes that proactive discos that prioritize technology adoption and customer engagement will reap the rewards of the new tariff system. As Nigeria's electricity sector undergoes this pivotal transformation, stakeholders must collaborate to address the existing gaps and ensure a smooth transition to the service-based tariff regime.