The recent hike in electricity tariff by the Federal Government is insensitive and uncalled for. Coming amid the hardship in the country and barely 10 months after the sudden removal of fuel subsidy, it amounts to double punishment on the suffering people of Nigeria.
The tariff increase, which took effect from April 3, 2024, is over 200 per cent. From N68 per kilowatt-hour, it jumped to N225 per kWh. According to the Nigerian Electricity Regulatory Commission (NERC), the increase will only affect electricity consumers on Band A category. This category is made up of homes that supposedly enjoy up to 20 hours of electricity a day and it reportedly constitutes about 15 per cent of the total Nigerian electricity customers. They are said to consume 40 per cent of the nation’s electricity.
NERC also noted that the metering rate in this category is up to 80 per cent. The increase for Band A is a pilot phase. Band B, C, D, and E are not affected for now. Nevertheless, the full cost-reflective tariff is billed to take effect within a period of three years.
Despite the tariff increase, the Minister of Power, Chief Adebayo Adelabu, said government was still subsidising 85 per cent of electricity supply in the country. Out of a little above 12 million registered electricity customers nationwide, Adelabu said about 10.5 million customers would continue to enjoy subsidy at about 70 per cent until it is finally phased out.
NERC has also issued directives to power distribution companies (DisCos) on the implementation of the Multi-Year Tariff Order. According to the commission, all DisCos shall set up a portal by April 10, 2024 on their website that allows all customers to check their current Bands by entering their meter or account numbers. It directed that all customers wrongly billed at the new rate should be refunded through energy tokens no later than April 11, 2024. The regulatory body has slammed a fine of N200million on Abuja Electricity Distribution Company (AEDC) for wrongly applying the new rate of N225/kWh to all customer bands instead of customers on Band A.
As expected, the current hike has not gone down well with many Nigerians. The Nigeria Labour Congress (NLC) has threatened that the hike would come with some consequences if not reversed. It described the tariff hike as wicked and unpopular, arguing that high power tariffs had not supported manufacturing anywhere in the world.
The Yoruba socio-political group, Afenifere, and the Northern Elders Forum (NEF) also condemned the tariff increase. Afenifere said the relevant government agencies should first of all ensure regular and efficient supply of electricity “before acceding to increase in payment for services that are being poorly rendered.” NEF, on its part, said government’s action was a display of complete disregard for the wellbeing and welfare of Nigerians.
The Organised Private Sector (OPS) spoke in the same vein. According to the Lagos Chamber of Commerce and Industry (LCCI), the hike in electricity tariff and the Central Bank of Nigeria’s hike of Monetary Policy Rate from 22.75 per cent to 24.75 per cent would worsen the cost of doing business in Nigeria. As the Director-General of LCCI, Dr. Chinyere Almona, put it, “Feedback from businesses and analysts suggests that these moves will inflict severe pain on the private sector, further exacerbating the already challenging economic environment.” The Abuja Chamber of Commerce and Industry also condemned the electricity tariff increase, saying it could impose additional financial burdens on businesses, especially the Small and Medium Enterprises (SMEs).
Unfortunately, government appears to be only interested in the profit that will accrue to it from the hike. The NERC, for instance, said it would save N1.4trillion by ending subsidy for Band A customers which was projected to be N3.2 trillion in 2024. In making this calculation, government failed to appreciate the erratic nature of our electricity supply. Most individuals and companies rely more on generators to power their facilities. This adds enormous burden on the companies and invariably results in high cost of goods and services. The first thing should have been to improve the power supply to Nigerians before ever talking of increasing tariff.
The regulatory agency should first of all ensure that electricity generation companies (GENCOs) maintain the installed capacity given to them. The DisCos should upgrade their weak transformers and other facilities while the Transmission Company of Nigeria (TCN) should endeavour to upgrade the transmission facilities. Government should have also found solutions to galloping inflation, high cost of living, food insecurity, hunger and poverty, insecurity and unprecedented hardship in the country before considering this tariff hike.
Besides, many governments across the world subsidise energy to help citizens and to achieve ease of doing business. During and after the COVID-19 pandemic that ravaged the world, many advanced countries found it necessary to subsidise the cost of energy. About 27 European countries reportedly subsidised energy costs in 2022 with €390 billion. It won’t be a bad idea if the Nigerian government does the same thing pending when the economy stabilises and electricity distribution becomes available and accessible. Governance should have human face. The timing of the electricity tariff hike is wrong. It is against the welfare of Nigerians and should be suspended for now.