It is an understatement to state that many Nigerians are groaning under the weight of the new electricity tariff the Federal Government imposed on Band A consumers recently. This category of consumers is made up of homes that reportedly enjoy up to 20 hours of electricity a day. From N68 per kilowatt-hour, the tariff went up to N225 per kWh, an increase of over 200 per cent. For now, Band B, C, D, and E are not affected by this pilot phase, but the full cost-reflective tariff is billed to take effect within a period of three years.
A number of stakeholders have asked the government to reverse the tariff hike. The Senate Committee on Power, in its recent interactive session with the Minister of Power, Adebayo Adelabu, and stakeholders in the power sector, joined the call for the reversal of the tariff increase.
Even before the hike on April 3, 2024, the Senate had urged the FG not to increase the tariff, saying it was ill-timed. It noted that the increase came in gross disregard of increased economic challenges with attendant widespread poverty and high cost of living in the country. It implored the government to rather focus on electricity generation and distribution.
The lower chamber, the House of Representatives, similarly spoke against the tariff increase. Expressing concern over discrepancies in customer categorization and threats to regulatory certainty and investor confidence in the sector, the House called on the Nigerian Electricity Regulatory Commission (NERC) to suspend the implementation of the electricity hike in the country.
As expected, the Nigeria Labour Congress (NLC), Trade Union Congress (TUC), and some other bodies like the Nigerian Bar Association (NBA) kicked against this tariff hike and called for a reversal. The NLC and the TUC gave the NERC and power sector operators one week ultimatum to reverse the electricity tariff hike. In a joint speech to mark the 2024 Workers’ Day in Abuja on Wednesday, President of NLC, Joe Ajaero, and that of the TUC, Festus Osifo, lamented the poor state of the Nigerian economy due mainly to poor leadership and policies. “Our nation faces escalating poverty, dwindling opportunities, and widespread disillusionment. Genuine businesses struggle, unemployment soars, and the government remains indifferent,” the labour leaders regretted.
In condemning the tariff increase, the NBA Ikeja branch called it unjust, illegal and lacking empirical basis. It threatened to take legal action if the government and concerned individuals failed to reverse the hike within seven days after it addressed the press. The National Association of Nigerian Students (NANS) threatened to hold a nationwide protest on May 7, 2024 against fuel scarcity and electricity crisis. The Organised Private Sector (OPS) said the policy would worsen the cost of doing business in Nigeria.
In spite of these condemnations and concerns, the power minister and the NERC have continued to justify the increase. According to Adelabu, the hike was to prevent a complete collapse of the power sector. He made reference to outstanding debts owed generating companies (GenCos), said to amount to about N1.3 trillion, and to gas companies and noted that the government would require $10 billion every year for the next 10 years to fix the power sector. He said his ministry required more than N2 trillion for electricity subsidy this year whereas the government only budgeted N450 billion for it.
Incidentally, the tariff increase was done without regard to the poor services of the generation and distribution companies. National grid often collapses. Some customers are yet to get meter as they suffer arbitrary energy charges while some buy transformers on their own. This is amid the high cost of living, hyper-inflation, unemployment and acute poverty and hunger in the country.
The truth is that this electricity tariff hike is not sustainable. It will cripple local manufacturers and entrepreneurs. The majority of Nigerians who are already battling high cost of food and other items cannot afford it. Even if there should be an increase, it should not be as high as what is currently obtainable. The government should take a second look at this policy bearing in mind that welfare and security of citizens remain its number one objective.
On their part, consumers should look for alternatives like solar or learn how to put off some electrical appliances when not in use. For now, it is our considered view that government should continue to subsidize the energy sector as it is done in many other countries to help the citizens and to achieve ease of doing business pending when the economy stabilizes. The ultimate solution will be to break the power monopolies and ensure that Nigerians have access to alternatives as it is done in the telecommunications industry. It is also time to take a second look at the privatization of the energy sector.