The problem of PHCN is that their tariffs are too low. This leads to excess demand for electricity that they can't satisfy. Even if they double their output, it will only lead to more demand, which will cause the shortage to continue.

According to elementary economics, an increase in price causes demand to fall. If PHCN can increase the tariff by 100%-400%, then people will start looking for ways to save power. People will start switching off bulbs and their television sets when they are not watching. Many people will choose fans with low power consumption over air-conditioning units. Soon after the tariff increase , the demand for electricity would have fallen to a level that PHCN can adequately supply!

At this stage, Businesses that are willing to pay more for power - because it'll still cheaper than using a generator - will have 24 hours power supply while those who can't will at least not have to put up with their rich neighbours' noisy generators in addition to the heat and mosquitos they have to put up with when 'PHCN' strikes!

If you've noticed, there's a reluctance on the part of investors to go into electricity generation in Nigeria. This is because, due to the amount of investment involved and the current price levels, it will be very hard to make a profit. When the general price level for electricity is increased by PHCN/NEPA, investors will rush in to the market.

Through competition the prices will eventually be driven back down to what we are paying today, but the difference will be that electricity will be available to anyone that is willing to pay a small amount for it. There will no such thing as shortage in a flexible and fair electricity market, or what do you think?

My people,

I will really appreciate your comments on this issue.

Thanks.

--------------------------------------------------------------------------------

The merchants who import and sell generators will continue to do good business till Nigerians stand up to reject suffering from lack of service from phcn. They use to be knoe as ECN before the civil war, they later changed to NEPA( never expect power always), and now know as PHCn- i don't know what this means.
PHCN

check out
P-Please H- Hold C- Candles N- Nigerians.

Problem Has Changed Name.

I don't think increasing the tariff is going to do much good. Before you can make any increase, the commodity you're supplying has to be available first. You're suggesting PHCN do it backwards. The thing is NEPA/PHCN is staffed with incompetent bumbling people. Then they are corrupt;and I don't mean upper echelon, it starts from the bottom rungs!

You owe a "crazy" bill (As much as 10,000 a month for a residence, ). The dudes handing out the bills tell you they can fix it, for a token of say 3000. You pay them, they go to the computer room and your next bill reads 1500!

Each year, PHCN tells you they are generating 2500megawatts or 3000megawatts- all this is balderdash! Even if they can only generate 100megawatts, let them distribute that first for all to see. Their infrastructure needs a total overhaul- poles, transformers, cables etc.

The good news is that there is going to be mass retrenchment at PHCN very soon! I hate to sound so joyous about this, but desperate situations require desperate solutions. The staff is a big minus at PHCN and someone has noticed.
P.S- Today makes it one week since I last had power in my house, just because it rained and 3 rotten poles fell. One week to erect 3 poles? In the 21st century?

Nwoke:

The problem of PHCN is that their tariffs are too low. This leads to excess demand for electricity that they can't satisfy. Even if they double their


If you've noticed, there's a reluctance on the part of investors to go into electricity generation in Nigeria. This is because, due to the amount of investment involved and the current price levels, it will be very hard to make a profit. When the general price level for electricity is increased by PHCN/NEPA, investors will rush in to the market.

Why invest in power generation when you can make more money selling generators and maintaining generators. I agree with darqly the service has to be available before you make any price increase otherwise who would want to pay.

Competition won't do us any good. Look at the gsm tarrifs i believe there are three companies mtn, econet, and glo yet the tarrifs are still high!

Power generation is a very easy problem to solve, PHCN/NEPA/minister of power/obasanjo are all corrupt. that's the real problem. I heard they spent 280 million dollars buying military aircraft from an israeli company to checkmate the Niger Delta rebels. that's like[b] 28 billion naira.[/b] If they spend that amount on NEPA we would all have power. But no they collect kickbacks from the generator cartels, so they can still stay in business.

Power is cheap everywhere. My power bill for the month is 30 dollars, 2 bedroom apartment. and thats because i leave my lights/computer on all night. 30 dollars thats what i spend drinking with friends in one night! so i don't agree with you when you say tarrifs should be increased

Please change d title of this thread to "PHCN: Price of Darkness to high". How would someone say that the 'price' of 'electricity' is high? How do we define 'price' and 'electricity'? When I am supplied less than 1 hr a day of a commodity that I pay for at a flat rate of N2700. 00 a month, can I in all honesty say that I have bought d commodity tht doesn't itself exist? Come on guys, lets get over this stupor. NEPA (or is it PHCH?) has been one big monstrous disaster in Nigeria over the decades. It has assumed a cancerous dimension. We need to scrap this sh*t and return to d stone age (that we are already in, anyway).

Anyway, but not for them, my entry wouldn't have won d 'my day' competition in BBC. Take the link and check it out http://news.bbc.co.uk/2/hi/africa/4927362.stm

Where I work, we spend an average of N6,000,00.00/month on diesel fuel to power our pumps in the Water Board, Calabar. This accounts for about 60% of our running cost. Imagine what that could have done to both my organization, the employees and the consumers, if we had sufficient electricity supply to keep the taps in Calabar running. (Of course, our taps never run dry in Calabar, at least in the last 3 years) Thumbs down for PHCN.

pure supply and demand increasing it is the key there is power tought laws against vandalism. later on they can drop prices according to their supply rate. but nigerians will not understand.

Nwoke:

The problem of PHCN is that their tariffs are too low. This leads to excess demand for electricity that they can't satisfy. Even if they double their output, it will only lead to more demand, which will cause the shortage to continue.

I think the premise behind that comment is flawed. In fact an increase in demand is what you want. It invariably means goods and services are being provided and value is being created.

Besides why should PHCN want to restrict demand/conserve for electricity. Energy conservation only comes into play when the primary energy source i.e. Natural gas, coal, hydro-electric dams are unable to sustain the required levels of production. At this point I don't think fear of natural gas running out is PHCN's problem. If I remember correctly, Nigeria is grossly under-powered. South Africa has the capacity to generate some 40,000 mw. PHCN has been talking about 4000 mw since OBJ got to power.

If rates are increased and people conserve, then PHCN will not develop their infrasturcture further. The consequence will be a stagnation of economic development. Nigeria needs affordable, available electricity and a good transportation infrastructure to develop, not a hike in PHCN's rates.

Nwoke,
How could you say the problem is with low tariff when NEPA is virtually producing nothing and reaping us off! In most areas, they don't read the meter in order to charge consumers appropriately. They just decide on any figure, only God knows how they do it! Even if they don't supply electricity for 2 weeks, their bills never reduce to reflect the period when they didn't perform. They continue to cheat, reap us off, all because their is a law protecting them from litigation just like the Rail Corporation. That's why they are both in the same comatose situation! When OBJ became president, his government pumped billions into into NEPA, years after, there's still no improvement and nobody has come to tell us what happened to the billions.

Let NEPA increase its output to a significant level first before we start talking of tariff increase! Ain't it shameful, almost 8 years now and NEPA's output has been between 2500 megawatts and 4000megawatts. You won't believe this, my company has been running on generator 24/7 for more than 6years!
Why?
because NEPA ain't reliable! Imagine an electricity current that it barely enough to light a flourescent bulb.
The UPS shutting down most times because they were not fully charged.
People getting trapped in the elevators now and then.
Equipment getting destroyed by erratic current.

Let NEPA perform as expected and people will sit up. Let me tell you something Nwoke, when electricity supply becomes regular/permanent and the NEPA staff take meter reading as at when due bills will increase. For those who leave all sorts of equipment on when going out or when they don't need them, they would adjust.

Your topic is one of the major issues in Nigeria today.Do you realise that people must have a feel of justice to support any cause?In nigeria today Lagos generates probably 70% of PHCN revenue_Does PHCN give Lagos 50% of generated Electricity? You talk about increasing cost but you forget that we even pay for what we don't use every month whether you are in town or not. Do you know that the system of billing is such that you cannot in all honesty cut down on usage because it is as arbitrary as you can imagine. It is important for us as Nigerians to have stable electricity but don't make it look like entrenching the PHCN rip off will solve the problem.

[b]
To insinuate in any way that the the problem of PHCN/NEPA is low price of electricity can be nothing but blatant falsehood.
The truth of the matter is that the price of electricity in Nigeria is higher than else where in the world!
I tell you why: it is only in Nigeria that consumers pay electricity bill at the end of the month without getting supply. Contrary to the law of demand and supply, Nigerians are yet to disconnet their powerline from the PHCN poles. It is only in Nigeria that people collect salaries without  working as it is in the power PHCN. It is only in Nigeria that the colossal amount budgeted since 1999 by the Obasanjo administration can be spent without result, yet no probe of the management of PHCN or the Ministry of Power and Steel. It is only in Nigeria that refurbished turbines are installed as new ones without qualms, only to work for few days and break down. It is only in Nigeria that a lawyer is made the Minster of Power while there are thousands of Electrical and Electromech engineers who can deliver in few days. It is only in Nigeria that ministerial appointments are given as political patronage to the most unqualified. It is only in Nigeria,  I can go on and on but for lack of time!

It is therefore a misinformation and a misrepresentation of facts to say that the power supply crisis in Nigeria is in anyway related to PRICE! PHCN is a MONOPOLY! If it was the case of price, they are at liberty to increase their tariff without anyone raising an alarm as they have done over the years without result. Since I was born (now 35 years) the excuses of PHCN/NEPA has always the same: water level, bird in the turbine, vandalization, militants in the Niger-Delta etc. Shame!
problem of price that made NITEL redundant until the introduction of the GSM technology into the Nigerian telecommunication market?  Nigerians are no fools!
Thanks my good friend.
Other African nations not near Nigeria in human and material resources have long overcame these problems.
Note: NIGERIA HAS THE FINANCIAL CAPACITY TO PROVIDE FREE UNINTERRUPTED POWER SUPPLY TO HER CITIZEN IF WE CAN MANAGE OUR GOD-GIVEN RESOURCES MAXIMALLY! The problems are in one word: CORRUPTION!

Is it the [/b]

I agree completely with you, Nwoke. NEPA should raise their fees by at least 500 percent. The problem is that NEPA cannot provide enough electricity and what little they provide is quickly sucked up by the rich people that blast all their air conditioner ( I am guilty of this). The increase charge for electricity to give people incentives to maybe leave the windows open and keep the air conditioner off even when "NEPA has brought light". Also, factories and businesses should get priority when it comes to power supply.

Getting a job and being able to support your self and your family is a lot more important than the discomfort that you will experience from lack of light. But, don't expect the average Nigerian to understand the laws of supply and demand.

Thank you my brother. i thought no one would understand. Although there's the problem of corruption too.

Any attempt to keep prices below what customers are willing to pay to clear your inventory is equivalent to rationing, which is what makes NEPA so frustrating. People trying to do business are willing to pay more to have constant and predictable power so they can make plans and follow them.

Businesses are more important than 'poor people' because when they are able to operate they can employ those 'poor people' and make then rich. If businesses are failing, everybody will be poor. Why not develop the country to the level where even the poorest person will be able to afford more realistic prices?

My prediction is that electricity shortages will continue no matter how many new power plants are built until the prices are jacked up to a more realistic level. Demand will continue to outstrip supply no matter what.

Ever since the fuel price increase, have we experienced any fuel shortage? No! Can't you understand why?

Nwoke:


Ever since the fuel price increase, have we experienced any fuel shortage? No! Can't you understand why?

Ever since i could remember fuel prices have always been increased yet we still had shortages. We are a top ten oil producing country so our fuel shortages were artificial; created by people to make money. So fuel and power generation are two different things in my opinion.

We do not generate enough power to go around.

Yes, we are in the top producers of crude oil, but you still need to refine the oil before you can use it in cars e.t.c.

Refineries cost billions of dollars and no one in their right mind is going to build enough of them to meet demand in a country that is as unstable as Nigeria. And thats the reason why Nigeria, even though being one the leading exporters of crude oil, still imports just about all the oil you put into your car.

As for the "we do not generate enough power to go around" that tells us that the demand exceeds supply. Well, then you have to raise the price of the electricity to the level that demand = supply.

Afeni:

you have to raise the price of the electricity to the level that demand = supply.

How about increasing the supply level? or is that impossible?

Well, what incentive is there for a company to increase supply? Afterall they make barely anything from what they are producing.

Things don't work that way. If there cost of electricity goes up, more companies are going to be willing to invest the millions of dollars so they can get get into the market and start selling electricity.

Let me give you a basic example. Imagine if the price of cassava increased from 1000 naira to 5000 naira, don't you think that many people that left the village to come to lagos might decide to return back home and pick up farming? However, they won't leave the city to become cassava farmers if the price of cassava remained at the same level of 1000 naira.

When a lot of them do that, the price of cassava would decline in the long-run because they would have to compete amongst each other.

Afeni:

Well, what incentive is there for a company to increase supply? Afterall they make barely anything from what they are producing.

@Afeni
Do you have any evidence of how much they make or is that an assumption? The last time I checked PHCN was a government-owned entity that does not publish accounts. and is/was a monopoly at that.


@Everyone
Besides what happened to the IPPs (independent power providers) that were supposed to accompany the deregulation of the generating sector. Are they operating and are they allowed to fix their own prices?

Good point. I have to look into how far they have gone in privatizing NEPA.

THe sector has not been privatized at all. A monopoly that is not free to raise prices isn't much of a monopoly.

since it's a monopoly don't you think they are the only ones making money from power generation in Nigeria. So why the need for a price increase

Since we are all waxing economics,

Productivity = output/input

increase your output NEPA because you definately cannot reduce your input for productivity to go up

Oga Admin,

The problem of PHCN is not low tarriff ooo, We dont even bother to ask how they spent what they earn? we aint asking why PHCN preffer Estimated Bill to reading meters? Why a small shop with no applicance pay same amount with a fully filled apartment. its rather logistic i would say.

GOD said "let there be light".
NEPA says "No my LORD"

For a PRIVATE COMPaNY looking to supply constant electricty to private companies then increasing the price of electricity is a good idea,

For a national outfit like NEPA, it's a terrible idea!!! the simply arent providing enough , if everybody pay thier bills they still wont have enough power to distribute as at the moment

Of course, before the prices can be raised there has to be accurate billing. They must charge you more when you use more and less when you use less, and they must disconnect you if (and only if) you don't pay up. When that has been done, then they can keep raising the price until the demand falls to the current level of generation. The people that need electricity for business will be very happy to pay, since it'll be less stressful and cheaper to pay the new tarriffs for constant electricity than to be forced to use power generators.

@seun
do u think raising the price of power would solve the epileptic state of power or the accurate billing system? well as far as i am concern as long as our corrupt leaders in government are only paying lips service to the issue of power generation, we are bound to be at the mercy of generators and its expenses.

PHCN + Nepa does not have the technical ability to provide the kinda power we need, even if we give them x 100 of what we pay [presently, they still cant provide, they prefer to blame rather than work out their problems.

Exactly, hence the reason why they should charge a lot more money for the electricity so that those that can afford it get to use it. The profit they get for charging and arm and a leg can be used to further develop their infrastructure so that they can increase output.

do u think raising the price of power would solve the <<snip>> accurate billing system?

Where it exists, the problem of random billing cannot be solved by increasing the price. That is not a technical problem. They can just fire all the corrupt billing officials and hire fresh graduates. However, even if the billing is made more accurate, it would not solve the problem, which is that demand exceeds supply.

PHCN + Nepa does not have the technical ability to provide the kind of power we need

"The power we need", i.e. electricity demand, is not a constant. It depends on the price.

When electricity is very cheap, people use it for watching TV, for powering light bulbs even (instead of the more efficient flourescent lights) during the day, for air conditioners and all sorts. This is far more than the power that NEPA can supply, so what they do is that they randomly switch people on and off. This is known as rationing.

If the price goes up, all of a sudden Johny would remember that he doesn't need to use AC when there is fan. All of a sudden, sis eko with the power guzzling deep freezer will realize that to recoup the cost of electricity she needs to charge people who want to keep items in her freezer. All of a sudden, mama bomboy will start ordering her children to put off lights when they are not in use. All of a sudden, people will start conserving electricity.

On the other hand, if the supply goes up with the same price, it wouldn't help much. People will simply start using electricity more aggressively. Those who were using generator most of the time will start trying to use NEPA to save money. Demand would quickly outpace the supply leaving us exactly where we started, even with no corruption.

Imagine that there is no water in your town except for a particular tap. Every morning people will form a long queue to get access to the tap. Now, because people know they can't join the queue more than once before going to work, they will all start competing by either carrying more buckets along with them to the queue or asking others to take their buckets along and fetch water for them (for free). The place will be congested. Whether you need the water for cooking so you don't die or you need it for wasting, it will be the same.

Now if you just charge a token fee, instead of money going to those who are jobless and therefore patient, it will go to those who need it badly enough that they are willing to pay for it. And when they get such water, they won't waste it because that's wasting money. With the revenue earned from the tap, the owner can dig another borehole to benefit everybody. That is what I have in mind for NEPA. When price goes up, demand goes down. It's a law.

And who should we blame for that? you dont pounce on the individuals now, if they are so sure that after increament they can meet the standard they should aswell to seek a loan from whereever, put this things in place and rechannel how distribution is made and that way things would work but anything aside that my bro. increament wont work ooo.

See i live in a community where you have a lot of nepa officials, you need to see how powerful their structures are plus they dont pay for electricity.

See i live in a community where you have a lot of nepa officials, . .they don't pay for electricity.

Of course, before we can talk about increasing prices, the current freeloaders should be forced to pay!

When electricity is very cheap, people use it for watching TV, for powering light bulbs even (instead of the more efficient flourescent lights) during the day, for air conditioners and all sorts.  This is far more than the power that NEPA can supply, so what they do is that they randomly switch people on and off.  This is known as rationing.

I am very puzzled. When electricity is expensive, what would pple use it for? Nothing? What do u use to watch TV, A/Cs or power light bulbs in the first place? Batteries? don't they watch TV, power light bulbs or use A/C in neighboring Ghana or Togo? If all these is far more than the power that NEPA can supply then why are they still in existence in the first place?

If the price goes up, all of a sudden Johny would remember that he doesn't need to use AC when there is fan.  All of a sudden, sis eko with the power guzzling deep freezer will realize that to recoup the cost of electricity she needs to charge people who want to keep items in her freezer.  All of a sudden, mama bomboy will start ordering her children to put off lights when they are not in use.  All of a sudden, people will start conserving electricity.

How many pple in Nigeria use A/C? Some don't even have common fans. How many sisi ekos use "power-guzzling" freezers and is it with NEPA's erratic candle light that they use to power it? How do you conserve what you do not have?

On the other hand, if the supply goes up with the same price, it wouldn't help much.  People will simply start using electricity more aggressively.  Those who were using generator most of the time will start trying to use NEPA to save money.  Demand would quickly outpace the supply leaving us exactly where we started, even with no corruption.

According to the theory of economics, demand and supply go together, in NEPA there is HIGH demand but NO supply! You seem to insinuate that pple are using generators because they are too rich to be seen using NEPA! In contrast they use generators because there is simply no alternative! Pple using generators are on their knees praying for NEPA to get better, do you know how much it costs to fuel and maintain a generator?

With the revenue earned from the tap, the owner can dig another borehole to benefit everybody.  That is what I have in mind for NEPA.  When price goes up, demand goes down.  It's a law.

Increase in NEPA tarrif will not bring down demand. Everyone needs electricity to survive regardless of cost! The problem of NEPA is NOT revenue, NEPA alone has guzzled billions of dollars with nothing to show for it, increasing tarrif will simply add to the criminal misery of Nigerians who are forced to pay for services not rendered!