…Hike ranges from 10% to 121.5%
…We’ll resist it — NLC
…Another betrayal of trust — TUC
…Increase’ll impede growth of real sector — NACC
…MAlWrong timing — CISLAC
…Electricity pricing needs strategic approach — LCCI
…PDP rejects hike, says it’ll worsen hardship
…50% tariff hike not true, Presidency Source
By Udeme Akpan, Victor Young, Yinka Kolawole, Chris Ochayi, Dirisu Yakubu, Gabriel Ewepu & Obas Esiedesa
The polity was awash with a howl of protests yesterday by major stakeholder organizations as the National Electricity Regulatory Commission, NERC, approved an upward hike in electricity tariffs.
The Nigeria Labour Congress, NLC, vowed to resist the hike while the opposition Peoples Democratic Party, PDP rejected the hike outright, saying it’ll worsen economic hardship. On its part, the National Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA decried the hike, saying it will impede growth of the real sector, while the Lagos Chamber of Commerce and Industry, LCCI said electricity pricing needs strategic approach.
Some civil society organizations also lent their voice to the development, with several of them saying it’s unfriendly and wrongly-timed.
The development indicates tough seasons ahead, especially as government and organized labour are still in talks over a recent hike in tariff. The latest tariff hike takes effect from July 1, 2021.
A hike in tariff last September sparked nationwide uproar, prompting the setting up of a committee to review the hike. The committee is yet to conclude its work before yesterday’s hike was slammed yesterday.
Hike ranges from 10% to 121.5%
Moreover, contrary to the claims of the Nigerian Electricity Regulatory Commission, NERC, that the latest hike is minimal at about 10 per cent on ranging between N2 and N4, a letter it sent to one of the electricity distribution companies indicated that a segment of consumers have been slammed with over 121.5 per cent increase.
Using the case of Ibadan DisCo, NERC’s letter shows that Band A (minimum supply of 20hrs daily) will increase by N6.85 to N69.18/kwh, indicating a 10.98 per cent rise.
Also, the tariff for customers in Band B (minimum supply of 16hrs daily) will increase by 13.1 pe rcent (N7.65) to N66.04/kwh from the present N58.9/kwh. For customers in Band C (minimum supply of 12hrs daily), the increase is 29.13 per cent (N14.19) to N62.92/kwh).
The highest tariff increase will be for consumers in Band D (minimum supply of 8hrs daily) with 121.5 per cent (N32.79) hike to N55.76/kwh from N26.97/kwh.
NERC explained that the review was necessary following changes in inflation rate, foreign exchange rate, available generation, gas price, collection losses from ministries, departments and agencies of government, and capital expenditure (CAPEX) adjustments.
DISCOs liable for service improvement
On service improvement by the utility, NERC ordered that “IBEDC shall be liable for service improvements in accordance with commitments under its universal service obligations for providing electricity supply to customers.
“Subsequent retroactive review of IBEDC’s tariffs during Minor Tariff Reviews shall be based on the IBEDC’s MYTO load allocation of the grid total energy delivered to all DisCos in line with the vesting contract executed by IBEDC and NBET”.
The commission added that “where there is a failure to deliver on committed service level by IBEDC as measured over a period of 60 days, rates payable by all customers in the affected load cluster shall be retroactively adjusted in line with the quality of service delivered over the same period, upon verification by the Commission”.
It also stated: “On the contrary, the tariff for customers on service bands D & E (customers being served less than an average of 12hrs of supply per day over a period of one month) remains frozen and subsidised in line with the policy direction of the Federal Government. In compliance with the provisions of the Electric Power Sector Reform Act (EPRSA) and the nation’s tariff methodology for biannual minor review, the rates for service bands A, B, C, D and E have been adjusted by NGN2.00 to NGN4.00 per kWhr to reflect the partial impact of inflation and movement in foreign exchange rates.”
It’s insensitive — Electricity consumers group
However, stakeholders across the country have kicked against the tariff hike with the President of the Electricity Consumers Association of Nigeria, ECAN, Chijoke James, describing it as insensitive, noting that so far, the improvement in services promised by the government during the tariff increase last year has not happened.
He said, “There are no disposable incomes for people to spend combined with galloping inflation. I think it will be insensitive on the part of government to allow for that kind of increase in this period.”
Also, the President of Network for Energy Reform (Nigeria), Mr Kunle Olubiyo, said there was a big mis-alignment of governance in the power sector and the policy direction of government.
He said, “What we are saying is that the tariff before September 1, 2020, that was N24/kwh was profitable for the companies.”
Olubiyo accused the government of hiding behind the price of gas to increase tariff, noting that as a gas producing country, the cost was far below what the government was disclosing.
Labour kicks, vows to resist hike
Expressing shock over the increment, President of Nigeria Labour Congress, NLC, Ayuba Wabba, vowed that organised labour will resist the hike and urged Nigerians to stand up against it.
According to Wabba, “This is not only condemnable, but there is element of deceit in it because there is a standing committee of the Federal Government which the NERC, is part of, still working on how to address the issue arising from the last electricity tariff hike which Labour intervened.
“Most of the committee members are not even aware of this current increase. Basically, we are going to resist it and Nigerians must also stand up to resist it. It is like exploitation and it means that this exploitation will not have an end. When you look at the variables, it is even laughable. You are looking at the variable of inflation and the variable of the exchange rate which are supposed to be the responsibility of government to fix. Government ought to fix our economy and bring the exchange rate to the lowest level, same with inflation. Government is transferring its inefficiency to the consumers which the accompanying inflation will be very severe.
“I am sure that most of our manufacturers, both small and medium scale will not be able to afford all these. They have been crying and the implication is also that there will be some layoffs because people will now resort to importation, most of those companies, small and medium will resort to importation instead of producing here at home. It will also affect their (government) diversification policy. Certainly, it will further impoverish Nigerians especially workers. Currently, we are under the yoke of paying excessive charges over all services, and on this important commodity, is the worse off.
“It is really unfortunate also because in many climes, governments are subsidizing power because of the impact of Covid-19 on businesses, on health and on the world of work. Including African countries, we have statistics of countries that have actually assisted to ensure that electricity tariff is suspended for sometimes. There have not been increases. Unfortunately, we have not looked at all of these. The implication is that there will be consequences if this increase is not challenged. Very soon, Organised Labour will meet to look at the issue and respond appropriately. That I can assure you because it has bastardized the very work of this important committee that we thought social dialogue would be able to bring solution to this issue. It is one issue that affects every family, every home and every business. It is a very sensitive issue that government ought to be very sensitive.
“I have said time without number that NERC is conniving with the service providers instead of siding with customers. Even the very important laws that are put in place to guide against such arbitrary increases have not been respected. For instance, the customers’ forum which I remember was held in Kano State, where all of us rejected particularly the last increase because it has no basis. The increase certainly has no basis. In fact, part of the works the committee is doing is to look at the price of gas to the generating firms to be able to bring down even the current price before this increase. So, it has also basically bastardized the process of social dialogue.
“You also remember that establishments including very critical infrastructures, hospitals and the media houses have complained about this hike in tariff, the previous ones, because it is not affordable, it is not competitive, and it does not encourage businesses to flourish. Doing this without even consultations means that there is intent to undermine the system. So, this is very worrisome and that is why I think it has to be condemned. I have also mentioned the issue of many countries including our neighbour here, Ghana. I know that on electricity tariff, they were able to support citizens during this impact of Covid-19. I don’t know what is wrong with us as a country that we will not know issues that are very important and central to the survival of the Nigerian people.
“Here we are; poverty has increased because it is said that we are the poverty capital of the world. You know for sure that once you increase such tariff, it then means that inequality will also continue to increase because many people will not be able to afford goods and services. These are realities, these are facts, and it is really an unfortunate situation. Many people did not expect that this will happen including us, Organised Labour when the issue is already on the table. And we have also an agreement, signed agreement on how to go about this issue and bring succor to many Nigerians, including small and medium scale enterprises, and most especially consumers who are largely Nigerians that are below the poverty line.”
On his part, Deputy President of NLC, and General Secretary of the National Union of Electricity Employees, NUEE, as well as a member of the Federal Government Standing Committee on Tariff, Joe Ajaero, who was taken aback by the increase, simply said “It is not possible.”
Another betrayal of trust — TUC
The Trade Union Congress of Nigeria of Nigeria, TUC, expressed disappointment over the latest hike in electricity tariff, describing the hike as a betrayal of trust.
TUC, in a statement by its President and Secretary-General, Quadri Olaleye, and Musa-Lawal Ozigi, respectively, said: “We are disappointed by the recent hike in electricity tariff done (yesterday) by the Federal Government while negotiations are ongoing with Organised Labour on the last hike because of the untold hardship it has brought on workers and Nigerians as a whole.
“Sometimes, we wonder why this government espouses unfriendly policies that are capable of crippling the economy. There are many companies that have either closed shop or relocated to neighbouring countries because they cannot afford to pay the last tariff hike, yet this government has done another one. Does it mean there is no other way this government can creatively generate revenue? It has become obvious that the outrages from the Organised Labour, the masses and the series of negotiations we had with government were just cosmetic and hypocritical.
“There is so much deceit and laziness in the system. There is hardly any promise made that they have followed through. Only yesterday we read again that the Academic Staff Union of Universities, ASUU, is withdrawing its members because this same government had reneged on its promises reached few days ago. How can government go ahead to increase tariff again when we have not resolved the one done earlier? This is preposterous, ridiculous and sheer wickedness.
“We have been labelled what we are not because we want a peaceful industrial atmosphere. The economy was struggling before the outbreak of the pandemic and we thought it was wise not to worsen our situation. The sacrifice means nothing to these people, who forced us to tighten our belt while they loosen theirs. Darkness enhances criminal activities and now they have chosen to keep us in darkness thinking their high fences will save them.”
It’ll worsen economic hardship — PDP
On its part, the Peoples Democratic Party, PDP, has kicked against the tariff increase, calling it “New Year Gift”, admonishing that the new tariff should be jettisoned with immediate effect.
The party described the hike in electricity tariff from N2 to N4 per kWhr, as announced by NERC, as “insensitive, anti-people which will worsen the economic hardship being faced by Nigerians at this time.”
The party in a statement by its spokesman, Kola Ologbondiyan, contends that the reasons adduced by NERC were not enough to warrant such an increase in electricity tariff, especially at a time Nigerians are looking up to government for economic recovery programmes and packages.
The PDP urged the ruling political party, All Progressives Congress, APC, and its government to note that such electricity tariff hike, at this critical time “will bring more pressure on homes and businesses, impact negatively on our national productivity and make life more unbearable, particularly at this period of insufferable economic recession.
“What our nation needs at this point are positive policies that will encourage Nigerians in their productive endeavours and cushion the hardship they face on daily basis instead of wicked policies that will only worsen their situation.
“It is imperative for the Federal Government to note that Nigerians are already weighed down by high costs and weak purchasing power and as such should not be further burdened with high electricity costs.
“Our party therefore, asks President Buhari to immediately review the hike and make further consultations on more affordable ways to meet the power need of the nation instead of this resort to tariff hike.”
Need for strategic approach — LCCI
Commenting on the development, Director-General, Lagos Chamber of Commerce and Industry, LCCI, Dr Muda Yusuf, said there should be a strategic approach to electricity pricing to avoid a pushback from the consumers, noting that there was a review, just two months ago.
He said: “The commercial arguments may be strong, but there is a social context to be reckoned with, especially given the kind of product in question. It is also important to reckon with the economic and political ramifications of such price reviews. We need to worry about the sensibilities of the people. Let me reiterate that we are in support of a cost-reflective tariff for electricity. But the transition to the new pricing regime should be strategic and gradual to minimize shocks and risks of push-backs by the consumers.
“Context matters in policy conceptualisation and implementation. We need to worry about social and economic contexts. The economy is currently in a recession, purchasing power has been significantly eroded across all income classes, poverty situation has been worsening, and there is spiralling inflation. There are fresh concerns about resurgence of the COVID-19 pandemic. These contexts should have a moderating effect on price movement at this time, especially for a product of high social significance. It is important to take these factors into account in order not to put the entire reform process at risk.”
Increase will impede growth — NACCIMA
Director-General, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA, Amb. Ayo Olukanni, said that the tariff increase, though not unexpected based on the Multi-Year Tariff Order (MYTO), will further impede the growth of the real sector.
Olukanni stated: “The increase does not come as a surprise as NERC is implementing to the letter the directives of the Electric Power Sector Reform Act 2005, through the Multi-Year Tariff Order (MYTO) in accordance with Section 9 of the “Regulation on Procedures for Electricity Tariff Reviews in the Nigerian Electricity Supply Industry,” which provides a tariff path for the electricity industry, with bi-annual minor reviews to take into account the impact of changes in a limited number of parameters (specifically inflation, dollar exchange rate to naira, natural gas price and available generation capacity).
“All said and done in the current reality of COVID-19 and its impact on the Nigerian economy, currently manifesting as economic recession, a continuous increase in the cost of production (which would be the result of these periodical increases) will impede the growth of the real sector. Business concerns will attempt to pass-on some of these costs to consumers by increasing their prices, demand will drop, and the vicious-cycle will continue.
“Our counsel to government remains the implementation of policies (even if it is in the short term) that increase the productive capacity of the real sector, as well as the disposable income of the general populace, as this is the time-tested approach to exiting a recession.”
Wrong timing — CISLAC
Civil Society Legislative Advocacy Centre, CISLAC, through its Executive Director, Awual Rafsanjani, said: “It is a wrong time, when Nigerians are battling with so many challenges of survival in Nigeria. The Federal Government has a lot of areas where they could block leakages, stop corruption and generate more revenue in Nigeria. This increase is not a welcome development but additional burden on Nigerians, and government should reconsider it.
“So rather than over-taxing ordinary people by this increase of 50 per cent while it’s obvious that there is no much to Nigerians’ income is rather misplaced priority of raising government revenue. The second fundamental issue is that government has already privatized electricity, so we don’t understand the rationale by the Federal Government for increasing this when they have already privatized it. It means the privatization that took place on electricity is not real privatization because if you privatise, the Federal Government should not have a hand in fixing or increasing the tariff.
“They can regulate and make sure suppliers supply sufficient electricity but we need to understand the involvement of this one now. The third thing is that Nigerians continue to pay for all these but they don’t get the expected power supply. So I think government should begin to think and work for the interest of Nigerians. Nigerians are going through a lot of challenges on how to survive and coming to do this increase now is rather going to add another burden. But it’s up to Nigerians to show their concern over this because some few of us have been canvassing and agitating for the betterment of Nigerians for improved governance but some people they don’t seem to know that some people are giving their lives, coming and sacrificing on behalf of all of us.”
Let power supply be stable —AFAN
National President of All Farmers Association of Nigeria, AFAN, Kabir Ibrahim, said: “It is quite poorly-timed even though somewhat realistic to ensure greater efficiency. I will advise government to give these matters latitude before implementation. I recall that it was contemplated earlier on in 2020. If it leads to any protests, it will require the people to be appeased through the enactment of some form of palliatives. Power must be readily available for there to be any hike in its price.”
Chairman of Non-oil Exporters in Nigeria, Chief Ede Dafinone, said: “While the increase is likely to affect consumers as well as manufacturers, the impact on consumers is likely to marginally affect disposable incomes and thus demand for our locally-manufactured goods. As manufacturers we appreciate that government requires higher levels of revenue to fund a budget that will serve to reconstruct the economy. We are equally mindful that government’s funds for reconstruction of the economy are best apportioned to save the manufacturers who oftentimes create employment by adding value to local raw materials.”
Increase is not necessary — CNYDO
National Coordinator, Concern Nigeria Development Youth Organisation, CNYDO, Joel Edegba, said: “It is uncalled for. The citizens are already going through a lot before now. So the FG should not add to the suffering of the masses. I support the second wave of protest in the country if that will make the Federal Government reconsider this hike in electricity tariff.
It is sad, unfriendly — GEJ Initiative
National Coordinator, Grassroots Empowerment and Justice, GEJ Initiative, Ebriku Friday, said: “The hike coming up at this time of the year is to say the least saddening and most unfortunate. It is baffling why Federal Government continues to hurt the sensibilities of Nigeria’s with unfriendly and alien policies and get away with it.
“It is a harsh decision and Nigerians must reject it and push until it is returned back to status quo. This is a new year for God’s sake, many Nigerians who travelled are yet to return to base and we all know how difficult the beginning of a new year is to ordinary Nigerians. Like I have said before, Nigerians will be willing to pay for light if government provides meters, and provide stable electricity and not the poor and pitiable situation of electricity we are faced with today.
“It is not over to the NLC and other civil society groups to shutdown Nigerian since that is the only language the government hears. My advice government at all levels should stop being insensitive to the plight of Nigerians.”
It’is in bad taste — PMNN
Founder, Peoples Movement for a New Nigeria, PMNN, Yahaya Ndu, said: “It is in bad taste, at a wrong time and full of insensitivity. It is beggars’ belief that while governments all-over the world are doing everything within their powers to make life easier for their citizens, the Nigerian Government is busy doing the exact opposite. As for my advice, government should immediately reverse this wrong decision.”
Increase is unfortunate — CAPPA
Director of Programmes, CAPPA, Philip Jakpor, said, “It is very unfortunate that the current administration, through its flip flop policies continues to make life difficult for the ordinary Nigerian. You will agree with me that manufacturing and other key sectors are hinged on power. Ironically, the increase in electricity tariff just like previous hikes does not mean there will be adequate electricity.”
50% tariff hike not true, Presidency Source
A top presidential source has described the reported 50 percent increase as false.
The source that spoke on the condition of anonymity said there was no adjustments in electricity tariff as reported
Describing the report as, “very clearly false,” the source said, “It is worth noting that there was no adjustments in tariffs and bands D&E remain frozen and with full subsidy as prior to September (55% of the on-grid population).
“The only changes were FX and inflation relative to the time the last tariffs were approved. No customer in Nigeria will experience any increase beyond 3.5/kWh; this means that on every N5000 recharge, customers will receive approximately 3-4 kWh less than they did under the previous tariff (i.e. a persons would receive 97kWh instead of 100kWh).
“Adjustment for inflation/FX are consistent with the provisions of existing electricity pricing regulations and allows for workers and employees to be compensated appropriately in line with inflation.
“All critical stakeholders are working to reduce costs of major inputs to the power sector in order to bring end user tariffs down. This is in line with our discussions with the Labour Centres.”