Business
Consumers Condemn Power Sector Privatisation As FG Hikes Electricity Tariff
The Federal Government through its Nigerian Electricity Regulatory Commission on Thursday officially released different documents indicating the approved power tariff increase payable by consumers to various electricity distribution companies in Nigeria.
In different orders to the 11 Discos operating in Nigeria, the commission stated that the tariff hike was based on the extraordinary review of the Multi-Year Tariff Order, as it explained that the order took effect from January 1, 2022.
It further noted that the order shall only be subordinated to a new tariff review order as might be issued periodically by the NERC, but this hike in tariff by NERC was kicked against by different power consumer groups, as they called for the complete reversal of the sector’s privatisation.
The NERC provided myriads of reasons why it had to effect an upward review of the tariff payable to Discos, as figures from the individual approvals for each Disco showed that the commission hiked the amount to be paid by consumers for electricity beginning from February 2022.
In the Abuja Electricity Distribution Company, for instance, non-Maximum Demand power users in Band A had their tariff increased from N51.75/kWh in January this year to N56.28/kWh from February to December 2022.
Also, non-MD consumers in Band B had their tariff increased from N49.72/kWh to N54.13kWh, while the non-MD power users in Bands C and D had their tariff raised from N45.65/kWh to N50.65/kWh, and N29.70/kWh to N33.20/kWh respectively, under Abuja Disco.
For non-MD customers of AEDC in Band E, their tariff was raised from N29.38/kWh to N32.88/kWh.
In the service bands, the NERC explained that customers in Band A were those receiving a minimum of 20 hours of electricity daily, while those in Bands B, C, D and E include power users receiving 16 hours, 12 hours, eight hours, and four hours of power supply daily, respectively.
The documents for each Disco also showed that aside from non-MD customers, there were other categories of maximum demand power users classified as MD1 and MD2, but most of the tariffs of these categories of power users were also raised.
It was observed that aside from the AEDC, the tariff hike played out in other Discos, as the regulator raised the tariffs payable by consumers in the various franchise areas of the power distribution companies.
For Eko Electricity Distribution Company, it was observed that there was a marginal decrease in the amount payable by non-MD consumers in Band A, those in Band B had their tariff unchanged, while others in Bands C, D and E had their tariffs hiked.
Under Eko Disco, non-MD customers in Band A had their tariff reduced from N56.08/kWh in January to N55.55/kWh from February to December, while non-MD customers in Band B had theirs unchanged at N51.81/kWh.
For non-MD customers in Band C, D and E, their tariffs were raised from N42.44/kWh to N47.44/kWh, N28.63/kWh to N31.75/kWh, and N28.63/kWh to N31.71/kWh, respectively.
Taking the Port Harcourt Electricity Distribution Company as another example, it was observed that the approved end-user tariffs for all the bands for non-MD customers from A to E were hiked by the NERC.
Non-MD Band A customers of PHED had their tariff raised from N57.16/kWh in January to N60.67/kWh from February to December 2022, while the tariff of non-MD Band B customers was increased from N56.79/kWh to N59.64/kWh.
Non-MD customers in Bands C, D and E had their tariffs raised from N50.15/kWh to N55.15/kWh, N35.31/kWh to N38.81/kWh, and N35.08/kWh to N38.58/kWh, respectively.
It was also observed that customers in MD1 and MD2 in the various bands under the PHED had their tariffs also raised by the NERC, as similar scenarios played out in other Discos.
This came as power consumer groups condemned the hike in tariff by the NERC, describing it as unfortunate considering the fact that power supply had failed to improve across the country amidst the hardship nationwide.
An industry expert and legal practitioner, who doubles as President of the Nigeria Consumer Protection Network, Kunle Olubiyo, stated that the increase should be resisted and the privatisation of the sector reversed.
He said, “They did it in January and gave the licensees permission to surreptitiously increase the tariff and do mechanical configurations such that we are being shortchanged.
“The key performance indicators that they put forward which have to do with supply being contractual and service-based have not been met, they have failed on that. Yes, if they say inflation is high, do we get commensurate service as per what we pay?
“I was at Aso Drive on Monday here in the capital city of Abuja, they get supply for just three hours in a day. The supply to areas outside the city centre has been bad too. So if we can’t get power and there is a lot of blame game, what is the justification for tariff increase?”
Olubiyo stated that many customers on estimated billing had received up to 300 per cent hike in their electricity bills, as the capping methodology approved by the NERC had not been effective.
He wondered why the commission would be bold enough to release documents showing the approved tariff hike payable by customers to the Discos, as he called for the complete reversal of the power sector privatisation.
He said, “The NERC we have today is NERC for the Discos. We’ve reached a crossroads now and the next thing we expect from the Federal Government is to go for all the credit lines and clean up their books, those who are owing Nigerian banks or so, and make sure that this privatisation exercise is reversed.
“This is because this is not the end of it. Their new MYTO under the service-based tariff has given the Discos an open cheque to continue to increase tariffs without the basic principles of equity. We have two parties to this contract, the demand, and the supply sides.
“But NERC that we have is on the side of the market. They are not taking the demand side, but you must have demand for you to maintain supply. So for us what we want is an outright reversal of the privatisation, we are not saying review.”
Also speaking on the development, the National Secretary, Network of Electricity Consumers Advocacy of Nigeria, Uket Obonga, regretted that the tariff hike was approved by NERC despite the hardship in Nigeria.
“We are going to bombard them. It is official now that they have increased the electricity tariff even in this hardship. This is unacceptable. We cannot continue like this,” he stated.
Meanwhile, the NERC explained that pursuant to the Extraordinary Tariff Review Application and Performance Improvement Plan filed by Discos, the commission approved the MYTO 2020 Serviced Based Tariff effective from September 1, 2020.
It said this was to ensure that rates paid by customers were in alignment with the quality of service to customer clusters as measured by the daily average availability of power supply.
It said the objectives of the latest order on tariff hike were to reflect the impact of changes in the projected minor review variables for the period January to December 2021 for the determination of Cost-Reflective Tariffs, adjust the Discos’ capital expenditure for the years 2021 to 2026 in consideration of the approved PIP.
The commission said it was to ensure sustained improvement in reliability and quality of supply in line with Discos’ capital expenditures proposal and PIP commitment.
It said the order would ensure that tariffs payable by customers were commensurate and aligned with the quality and availability of power supply committed to customer clusters by Discos.
The NERC said the tariff order would ensure that prices charged by Discos were fair to customers and were sufficient to allow Discos to fully recover the efficient cost of operation, including a reasonable return on the capital invested in the business, pursuant to the provisions of sections 32(d) and 76 2(a) of Electric Power Sector Reform Act.
It further said the order would provide appropriate incentives to ensure continuous improvement in the performance of the Transmission Company of Nigeria Plc in reducing its network technical losses, among others.
The Punch
President Bola Tinubu has commended the enterprising feat of Dangote Oil and Gas Limited in reducing the gantry price of Automotive Gas Oil (AGO), also known as diesel.
The Group recently reviewed downwards the gantry price of AGO from N1,650 to N1,000 per litre for a minimum of one million litres of the product, as well as providing a discount of N30 per litre for an offtake of five million litres and above.
The price review represents a 60 percent drop, which will, in no small measure, impact the prices of sundry goods and services.
The President, according to his spokesman Ajuri Ngelale, affirmed that Nigerians and domestic businesses are the nation’s surest transport and security to that glorious destiny of economic prosperity, noting the Federal government’s 20 percent stake in Dangote Refinery and why such partnerships between public and private entities are essential to advancing the overall well-being of the country.
Ngelale said the President called on Nigerians and businesses to put the nation in priority gear t this time. while assuring them of a conducive, safe, and secure environment to thrive.
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In a country with short-lived corporate excellence and a handful of centenary companies, hitting 130 years is undoubtedly a significant milestone for Nigeria’s premier financial institution, FirstBank. GEOFF IYATSE writes.
Experience, they say, comes with age. Nothing else aptly defines the consistent growth of First Bank of Nigeria Limited (FirstBank) and its consistent reinvention as the conscience of corporate Nigeria in the face of rising competition from traditional and other shadow banking brands.
Not many living Nigerians can list a single other existing Nigerian company founded in 1894, long before modern Nigeria was created. But FirstBank has not only survived the long 13 decades during which it etched itself into the socio-economic fabric of the country and created a niche as Nigeria’s banker, but it has also pushed itself into the frontier of financial technology evolution, making an inroad into the consciousness of tech-savvy Nigerian youths and the upwardly mobile banking public.
For an organisation that has stuck to Nigeria through thick and thin and enjoyed the monopoly of banking the country from the cradle, long before Africa tasted the beauty of financial system evolution, FirstBank could have been a dinosaur. That would have been easy. But it has chosen the tougher option; challenging traditions, breaking new ground, and constantly refreshing its operational template to stay ahead of the curve.
Established in 1894 as British Bank of West Africa (BBWA) by the late Sir Alfred Lewis Jones, a shipping magnate, FirstBank has been at the forefront of Nigeria’s economic growth and development through its superior banking services and social investments across sectors – manufacturing, small and medium scale enterprise (SMEs), agriculture, oil and gas and just about every other sector that has contributed to the country’s economic discovery.
The history of FirstBank is the history of Nigeria. At some point in its history, it even served as Nigeria’s Central Bank. Today, as the undisputed leader of the country’s brick-and-mortar banking, its nearly 800 business locations across the country give it robust presence in every local government across the nation.
Of course, in an era of ‘click’ banking, no financial institution is assessed by the strength of its physical banking network alone. Interestingly, the premier institution understands this logic, hence it has emerged as a force in continuously investing in cutting-edge financial technologies. For one, FirstMobile, its digital banking application, has also become a household name in the financial technology ecosystem. In 2015, when the platform was still at its infancy stage, its user base was about 60,000, a number that has soared to over six million (a growth of over 10,000%) as of last year. That has contributed immensely to its changed perception from traditional bank to innovative digital bank. Today, about 85 per cent of its transactions are initiated via digital platforms, according to insights provided by the bank in its public statements.
FirstMobile appears to have hit the bull’s eye in the bank’s reinvention drive and efforts to appeal to younger demographics. But the platform itself is only one of the potpourri of telecommunications-driven initiatives it has taken on to get young depositors on board. FirstOnline users have also grown from about 90,000 to over one million in less than a decade just as its USSD banking, which targets feature phone users, is even more successful with users increasing by close to 3,000 per cent in the last eight years, to about 15 million.
Last year alone, its Firstmonie Agent banking services processed over ₦1.1 trillion in transactions, more than double the amount handled by seven other big banks. Some of its strategic investments in technology include the development of its smart and interactive transaction banking platform known as FirstDirect2.0 and the introduction of the humanoid robot to the banking ecosystem in the country. The smart banking initiatives have been complemented by its Digital Xperience Centres (DXC) which are currently located in Lagos, Ibadan, and Abuja with plans to open more across the nation.
Overall, its digital banking has evolved in both volume and public perception even with artificial intelligence-driven commercials complementing its digital imprints. Ease, convenience and reliability created in recent years have moved the customer base from 0.6 million in 2015 to well over 42 million customer accounts as of 2023. This number, according to the Chief Executive Officer of FirstBank Group, Dr Adesola Adeduntan, during an interview with The Guardian last year, would double in no distant future as the organisation migrates aggressively to transaction-led banking. In September 2023 the bank’s non-interest income hit ₦293.0 billion, up 111.6% in comparison to September 2022 at ₦138.5 billion validating the bank’s commitment to a transaction-based era.
In addition, the number of users on the Bank’s digital channels has grown from about 600,000 users in 2015 to over 23.2 million users in 2023.
On the back of the extensive technology infrastructure overhaul FirstBank embarked on under Adeduntan’s leadership, its digital banking channels have become the most dominant delivery channel with the percentage of customer-induced transactions processed via digital channels increased from about 20% to over 90%. FirstBank has equally been consistent in its profitability. Its Group profit before tax (PBT) has climbed steadily from 10Billion naira in 2015 to 362.24Billion naira in 2023.
For an organisation that has not only created Nigeria’s banking industry but also dynamically shaped it, there is no reason the brand would not attract the best professionals. It attracted a blend of top Nigerian bankers and became the training ground for young professionals who have contributed to its rich history of corporate leadership. Despite this, Adeduntan who assumed office with a touch of dynamism, clearly understood the meeting point between institutional legacy and modern ‘click’ banking. In close to a decade since he first took over the reins at the Bank, he has brought this to bear, rejuvenating the rich corporate culture of the bank, competing actively in the youth space in both employment and business.
Nigerian banks have grown to become international brands, competing for businesses across Africa, (which they have dominated), Europe, Asia, and other Continents. With its United Kingdom subsidiary (which has a representative office in Paris, France) celebrating its 40th anniversary in 2022, FirstBank has led the revolution. Other subsidiaries of Nigeria’s premier financial inclusion services provider include FirstBank in the Democratic Republic of Congo, Guinea, Sierra Leone, and The Gambia; FBNBank in Ghana and Senegal as well as a Representative Office in Beijing, China.
Indeed, local banks have done well in recent years in opening offshore operations except that most of them are cost-centres, hence the promoters are often accused of ego-seeking and extroversion. And it is true because most of the subsidiaries’ operations have created a gaping hole in the bottom lines of the consolidated accounts of many of the institutions. But FirstBank turned the tide. In 2022, its overseas operations contributed a combined 21.3 per cent to the group’s pre-tax profit. Adeduntan has repositioned the financial institution from purely a Nigerian company to a multinational brand with African focus but a Nigerian nucleus.
Beyond its name, it has recorded several firsts in the industry it single-handedly created. Some firsts include – the first to be listed on the stock exchange, the first – amongst the existing banks – to adopt the use of ATM and the first Nigerian bank – and second in Africa – to reach the 10 million ATM cards-issued milestone. In addition, FirstBank is leading in AI and robotics with regards to the deployment of Humanoid Robots, in the financial services space in Nigeria. The robots are equipped with Video Banking and Artificial Intelligence (AI), taking on the role of friendly branch staff. The financial institution is the first to foray into arts, food, music, and other lifestyle sponsorships as part of the brand value proposition for clients of all ages.
Speaking on the resilience of the bank at a recent function Adeduntan disclosed what he called the bank’s secret of success: “At FirstBank, our purpose is to enable success, putting our customers and stakeholders at the heart of our business.
“For the years of our existence, we have focused on providing excellent financial services to meet the needs of our esteemed customers. We continue to improve on our products and create new ones that suit their specific needs. The reason why we have been successful is our ability to invent and reinvent ourselves. You can only be successful like that when you make your customer the centrepoint of all your actions. That is the secret of our success.”
The bank has demonstrated it is a responsible corporate citizen, playing a catalytic role in the economic and social development of the country. FirstBank’s sustainability/ESG focus, and commitments are in three key areas: Responsible Lending, Procurement & Climate Performance; Financial Inclusion & Diversity; as well as Education, Health, and Welfare.
Customers of the financial institution remain a vital element of its business. So, the bank constantly seeks responsible ways to provide lending and investment products and services that meet the customers’ needs, while ensuring that it manages the environmental social and governance (ESG) impacts in the process thus contributing to and promoting overall sustainable growth and development. About N5 Trillion worth of transactions were screened for ESG risks in 2023.
The bank has shown its commitment to playing a key role in the transition to a global net-zero economy by decarbonising its operations and value chains, driving climate finance, and promoting climate thought-leadership. For example, its partnership with Nigeria Conservation Foundation has seen the financial giant begin 50,000 trees planting with this year 2024 set as target year for this audacious goal.
FirstBank’s community development initiatives are anchored on its strategic Education, Health, and Welfare pillars. In 2023 alone, FirstBank executed various projects under the Start Performing Acts of Random Kindness (SPARK) initiative with growing impacts across 8 countries, including 60 beneficiary schools with over 150,000 secondary school students, and 30,000 underprivileged people and widows; over N100,000,000 (one hundred million naira) donations covering books and infrastructure for students, food items and clothing for the underprivileged, provision of capital for small and micro businesses.
Its FutureFirst programme in partnership with Junior Achievers Nigeria (JAN) has impacted over 1,000,000 (one million) people across the regions of the country including Lagos, Port Harcourt, and Abuja with the knowledge of financial literacy and entrepreneurship. It has also strategically driven partnerships with over 100 Charities/NGOs including LEAP Africa; International Women Society; UNGC; UN Women; Junior Achievement Nigeria.
Following the COVID-19 lockdown, FirstBank stepped in to donate cash (over 1 billion naira) and food to support the government in the fight against the pandemic. It also provided an innovative e-Learning initiative enabling the education of one million Nigerian students to drive sustainable efforts towards improving education for all. In partnership with the Lagos State Employment Trust Fund (LSETF), it launched a N5 billion LSETF-First Edu Loan scheme to cushion the impact of the COVID-19 pandemic on low-cost private schools in Lagos State.
For 30 years, FirstBank has remained a sponsor of the annual Nigerian Economic Summit, organised by the Nigerian Economic Summit Group, a think tank group with a mandate to promote and champion the transformation of the Nigerian economy into a private sector-led economy.
It is known for other sponsorships including, the Kaduna Georgian Cup Polo Tournament, now in its 103rd year, which is perhaps the longest-standing sports sponsorship in the world. FirstBank is also a long-standing sponsor of the Lagos Amateur Open Golf Championship at the Ikoyi Club, a property it has faithfully sponsored for 62 years.
The bank has played a crucial role in empowering entrepreneurs, women, students and the rapidly growing creative industries locally, which are gaining global recognition. Its strategic interventions through DecemberIssaVybe, FirstGem, SPARK, FirstBank Women Network and numerous other campaigns have been impactful, especially in addressing some key United Nations Sustainable Development Goals (SDGs).
FirstBank has demonstrated its commitment to Diversity through policies, partnerships, and initiatives, such as its employees’ ratio of female to male (39 per cent :61 percent); and 32 percent women in management, and 11 women on the Board of Directors across the FirstBank Group as well as various initiatives aimed at addressing the gender gap and increasing participation of women at all levels within the organisation.
In addition, the Bank’s membership of the UN Women is an affirmation of a deliberate policy that is consistent with UN Women’s Women Empowerment Principles – Equal Opportunity, Inclusion, and Non-discrimination.
And there have been rewards via awards for its leadership and life-changing initiatives. The recent ones include Best Corporate Bank at the recent Euromoney Awards for Excellence, Nigeria 2023; Best Corporate Bank Western Africa 2023, by Global Banking and Finance; Best Internet Banking in Nigeria 2023, by International Business Awards; Most Innovative Banking Brand in Nigeria, by Global Brands Awards; the Financial Institution of the Year 2023, by Afreximbank Pan-African Business and Development; Best CSR Bank Western Africa 2023 by Global Banking and Finance Magazine; Market Leader Nigeria in ESG – Euromoney Market Leaders 2022. For six consecutive years (2011 – 2016), FirstBank was named ‘Most Valuable Bank Brand in Nigeria’ by The Banker Magazine of the Financial Times Group and ‘the Best Retail Bank in Nigeria’ from 2011 to 2018, an award of the Asian Banker International Excellence in Retail Financial Services Awards.
At the heart of FirstBank’s success story – which includes enabling the success stories of its customers and other stakeholders – lies its ability to continuously reinvent itself. And the reinvention seems to have started in earnest. For instance, its stock soared recently, pushing the Group into the exclusive club of stocks with over one trillion (SWOOT) capitalisation. A few months after the remarkable feat, it went, shoving other lenders aside to reclaim the most capitalised banking stock on the stock exchange.
It has been 13 decades of rising and growing with Nigeria. But FirstBank is obviously not slowing down in its journey with the country its operation pre-dated.
Culled from The Guardian
