Victor EzejaNigerians have lamented about the potential negative impact of the latest hike in electricity tariff sanctioned by the Federal Government.
While some expressed concerns about the inevitable spike in energy costs, and how it will further choke the people already bearing the brunt of high costs due to petrol subsidy removal, others said it would cripple Small and Medium Scale businesses across the country.
The Nigerian Electricity Regulatory Commission (NERC), had on Wednesday, through its Vice Chairman, Musliu Oseni, announced an increase in electricity tariff paid by customers under Band A.
The Commission categorised electricity consumers into bands A to E.
While those under Band A are expected to have 20 to 24 hours supply, those in Band B have 16 to 20 hours supply; Band C – 12 to 16 hours supply; Band D – 8 to 12 hours supply and Band E – 4 to 8 hours supply.
The Commission said the tariff has been increased from N66 per kilowatt hour (kwh) to N225 kwh for Band A customers.
According to Oseni, increase takes immediate effect and only affects 15 per cent of the nation’s 12 million electricity users.
The Federal Government had repeatedly said the electricity subsidy have become huge burden like petrol subsidy and needed to go.
Also, making a case for the tariff increase, the government cited the high cost of gas used in powering generation plants and soaring inflation rate.
According to reports, electricity subsidy has gulped trillions of naira in the past years in Nigeria and is projected to reach N2 trillion in 2024.
However, reacting to the announcement, Nigerians including economic experts, analysts and social commentators expressed concerns about it exacerbating living costs.
READ ALSO: Ikeja, Eko DisCos Begin Implementation Of Tariff Increase For Band A Customers
Chief Executive officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, highlighted the major challenges in Nigeria power sector that need to be resolved such as funding and liquidity that pose threats to Investment in the sector.
He said: “The power sector issue has become a major conundrum in the economy. There is a major funding and liquidity crisis which is posing significant risk to investments in the electricity value chain.
“Costs across the chain have been rising as a result of the multiple macroeconomic headwinds.
Meanwhile, the system is not generating the desired liquidity to match the escalating costs.
While noting that the tariff review has become inevitable given the subsidy burden which was becoming unsustainable, for the government, Dr Yusuf stated that some fundamental issues need to be addressed in the electricity value chain.
READ ALSO: Nigeria’s Power Sector Journey: 2023 In Perspective
According to him, they include costs for inefficiencies that consumers are meant to bear, centralized structure of the power supply through national grid model, metering gap that brings about estimate billing, and other issues regarding capacity of electricity distribution companies.
According to the economic expert, “Tariff review is thus inevitable. And there is a limit to the subsidy burden the government can continue to bear.
“But it is noteworthy that the increase is not across the board as only 15% of electricity consumers are affected. And this is targeting the segment with the highest ability to pay. This reflects some attributes of equity in pricing.
“But some fundamental issues need to be addressed in the electricity value chain. There are issues of technical and commercial losses which are yet to be addressed. These are inefficiencies costs that consumers are compelled or expected to pay for as part of the cost recovery argument. And these costs are in billions of naira.
“There is also the exploitative practice of estimated billing. Millions of electricity consumers are yet to be metered.
“There is the problem of over centralization of the power supply through the national grid model. There are capacity issues with some of the electricity Distribution Companies, contributing to the lapses in electricity delivery outcomes,” Yusuf further stated.
Also commenting on the tariff increase, former lawmaker, Senator Shehu Sani, said “Increasing electricity tariffs by 300% will finally electrocute human lives and businesses in the country.”
On his part, a former Director-General of the Bureau of Public Service Reforms Dr Joe Abah, queried why the government would decide to hike electricity tariff by about 300 per cent without adequate consultation with Nigerians who are at the receiving end of the policy.
“The way we make policy in Nigeria is bizarre. How do you just hike a tariff by 300% overnight? Couldn’t they have consulted the minority said to be getting 20 hours light a day and phased it in over time? Na waa!,” Aba wrote on his official X handle on Thursday.
A Kaduna-based social activist and whistleblower, Malam Mahdi Shehu, said the electricity tariff hike would snuff out life from SMEs in the country given the chance potential impact of high cost on energy.
Underscoring the implications on the economy and wellbeing he said it would also lead to loss of jobs, increase in crime rate and other social challenges.
“300 % Hike On Electricity Tariff: This simply means collapse of more small & medium businesses, more death in hospitals, more unemployment, increase in crimes, more diseases, more mortality, more land space for mortuaries, more grave diggers, more pains, more trauma, more melancholy, more disloyalty, more uncertainty, etc. Well, so long, Villa will continue to have uninterrupted power supply on credit, For that long, they feel fulfilled. Me thought Muslim-Muslim ticket is about equity, pity, and compassion kudos to Cairo Pharaoh who was more compassionate,” the social critic stated.
Responding to an argument by another X user that the tariff hike being affecting only 15 percent of electricity consumers on Band A, Shehu contended that the electricity consumers who are on Band A that are companies would transfer the entire the costs burden to the people who consume what they produce and to whom they render services to. “Howsoever, the downtrodden are the full circle victims,” he added.
Another X user, Odogwu Anioma wrote: “The government is just choking the people with bills.”
A former House of Reps member Dachung Bagos, who appeared on Channels Television m, Politics Today on Thursday, said the timing the of the hike in electricity tariff was wrong.
According to him, before removal of subsidy the government needed to have put necessary measures on the ground to cushion the effect on the citizens.
“The plan of removal of electricity at this point is since wrong,” Bagos said.H e stressed that it should be done in such a way that do not hurt the common man so much.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
