On Friday, 3rd April 2024, the federal government reviewed electricity tariff upwards from N68 per kilowatt to N225 per kilowatt. This represents a whopping increase of 300%.
Following widespread outrage at this stratospheric increase, the Nigeria Electricity Regulatory Commission(NERC) issued a statement, to wit: that the newly approved tariff would reduce subsidy for the 2014 fiscal by N1.14 trillion; that the withdrawal of subsidy on electricity, leading to this sudden increase, would mitigate the impact of changes in macroeconomic parameters while largely protecting invaluable customers; that the increase in tariff would foster investments aimed at providing efficient service delivery in the NIgeria Electricity Supply Industry(NESI); that the new tariff would only affect consumers in Band A; and that customers in category B to E who consume 85% of electricity will not be affected by the new tariff.
According to the NERC, the juggernauts in Band A constitute 15% of electricity consumers and that those in this category enjoy an average electricity supply to the tune of twenty hours measured over a week.
It is intriguing that before the announcement of this new tariff, only the electricity distribution companies or DISCOs were consulted. The government and the NERC haughtily gave the short shrift to critical sectors such as the Organized Private Sector(OPS), Manufacturers Association of Nigeria(MAN), the Senior Staff Association of Electricity and Allied Companies, members of the Micro, Small and Medium Enterprises(MSME), Newspapers Proprietors Association of Nigeria(NPAN), the Nigeria Chamber of Commerce(NCC), the Media, Civil Society etc.
Even more intriguing and revealing is that the new tariff was announced when the administration of President Bola Ahmed Tinubu has not added value to the electricity sector by way of a single kilowatt since its assumption of office some ten months ago.
Apart from the fact that this astronomical increase is not predicated on any value addition to the electricity sector, it seems obtuse and self-serving. The increase principally benefits owners of the DISCOs, who were stealthily carried along, to the cavalier exclusion of critical stakeholders. It also seeks to impress President Tinubu’s puppet masters, the IMF and the World Bank, who have been pressing aggressively for “reforms”.
What is poignant about the new tariff is that these mostly indolent DISCOs had always been succored and propped up using funds belonging to the government/people. As if that were not enough pampering and chicanery, Nigerians are being fleeced to shore up these tottering distribution companies. Worse, in spite of subsidy by government, these DISCOs, which should be business concerns, have been clumsy at distributing electricity which they do not even generate. Not a few of them have made a mess of their mandate to the detriment and comfort of Nigerians.
Additionally, it is disingenuous and untrue to argue that the new tariff would affect only those in the Band A category and who constitute a “paltry” 15% of electricity consumers. The point is that if members of OPS, MAN, MSME, NPAN etc are compelled to pay the newly touted tariff of N225 per kilowatt, three scenarios are inevitable: The members of this elite category will pass off the cost incurred to customers in Band B to E. Second, if those in Band B to E are unable to afford their new, upgraded prices, they will be forced to downsize. Third, where downsizing makes survival challenging for them, they will then be forced to completely shut down and to put their workers in the streets.
Surely, the aforementioned ineluctable scenarios, arising from the increase of electricity tariff, cannot birth a virile or upward bound economy. Instead, they will drive the economy into the doldrums and a certain death. Coming on the heels of the mass exodus of blue chip and multinational companies from Nigeria, on account of a parlors operating environment, this is one subsidy that will sound the death knell of our economy.
Even more untrue, and a wild exaggeration of the type that seeks to set the River Thames on fire, is to claim that electricity consumers in Band A enjoy a twenty-hour electricity supply. If it were so, why did multinational companies recently exeunt the country and in droves? If the NERC is targeting the rainy season when the volume of water will increase and drive the turbines in our dams, what happens shortly thereafter in the dry season when the volume of water subsidises?
Also, coming shortly after the floating of the Naira and the peremptory withdrawal of fuel subsidy which resulted in a cost of living crisis, galloping inflation and unrivaled hardship, is it politic or judicious to insist on withdrawing subsidy on electricity? What purpose does it serve other than to further inflict more pain on Nigerians, to increase their suffering and to pulverize the economy?
In addition to its obtuseness, the increase in electricity tariff fails to consider the bigger picture. When the government claims that ours is one of the lowest electricity tariffs being charged, it fails to note that the living standards or income per capita in those countries are by far higher than ours. Whereas inflation here is 31.7% and counting, it is in the single digit in those countries. And at a minimum wage of N30,000 per month, a Nigerian worker earns a niggardly $23 per month at the prevailing exchange rate of N1,300 to the U.S. Dollar.
The fact is that the better-heeled countries of the world and the avatars of capitalism, notably the United States, Britain, Germany, France do subsidize agriculture, health, education and energy. This is in spite of the fact that their economies are in fine fettle and that in each of these countries, inflation is not up to 10%.
Thus, rather than find recourse in asphyxiating the people and exacting needless punishment on them, the Tinubu administration should obsess itself with fashioning out strategies to generate more electricity in order to fire and galvanize our economy. It is at such a point that it can charge the DISCOs to distribute it efficiently.
Nigerians have endured enough buffeting from this government’s ill-considered and ill-thought out policies. What they do not need is to suffer another suffocation by the government which is menacingly holding onto their jugular. This new tariff cannot stand. Let Nigerians breathe.