Labour, manufacturers kick as FG raises electricity tariff by 240%

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The Nigeria Labour Congress (NLC), manufacturers and energy experts have flayed the Nigerian Electricity Regulatory Commission’s (NERC) decision to hike electricity tariff for Band A customers from the current N66 per kilowatt hour to N225, representing a 240 per cent increase. They described the move as insensitive, discriminatory and predatory.

Band A consumers are those who are enjoying electricity supply for upward of 20 hours daily. NERC had in 2020 introduced Service-Based Tariff (SBT) to improve service delivery to end-user customers and ensure that electricity tariffs paid by end-user customers are a reflection of the services delivered by the Distribution Companies based on the number of hours of electricity supply per day.

Other categorization under the SBT are Band B: Minimum of 16 hours daily electricity supply, Band C: Minimum of 12 hours daily electricity supply, Band D: Minimum of 8 hours and Band E: Minimum of 4 hours daily electricity supply.

A statement by the NERC Executive Vice Chairman, Mr. Musiliu Oseni, however, assured that customers on Band B to E would not be impacted in the new tariff adjustment.

He disclosed that customers in Band A account for 15 per cent of the 12 million electricity consumers in the nation.

Reacting, NLC Spokesman, Mr Benson Upah, in a telephone conversation with Daily Sun, said the move was clearly insensitiven and cruel and should be immediately junked.

He argued that the increase would negatively impact businesses, leading to food inflation, company closures, and job losses.

Upah stated that those likely to  benefit from  the electricity price hike are the World Bank and the International Monetary Fund (IMF), not the citizens.

He said: “The government’s decision  is not only insensitive, it is callous.

“It’ll further pauperise consumers, especially workers whose wages are fixed and insufficient.

“It similarly makes the operating environment   more hostile for manufacturers with potential for an astronomical rise in cost of goods and services or in the worst case scenario, more closures and loss of jobs.

“The only people who stand to gain from this mindless social  violence  against  the people are the World Bank  and IMF.”

In his remarks, the former Director General of the Lagos Chamber of Commerce and Industry(LCCI), Dr Muda Yusuf, said electricity is a social service and that the current increase was discriminatory in approach.

He said the increase still represents what he called cross subsidy by making the elites pay more electricity in order to subsidize the average and poor Nigerians.

Lawal lamented that no matter how much they increase tariffs, the service delivery level by the Discos will still remain poor because the majority of them still lack the financial and technical capacity to drive the sector.

Yusuf, who is the Chief Executive Officer of Center for Promotion of Private Enterprise (CPPE), said the Federal Government must still find ways to continue to fund the power sector, warning that it cannot afford to leave it entirely in the hands of the private sector whose main motive is driven by profit

He further stated that due to the failure to meet the necessary electricity supply hours, the commission has moved some Band A customers to Band B.

“We currently have 800 feeders that are categorised as Band A, but upon reviewing those feeders’ performance, the Commission has now reduced it to under 500. This means that 17% now qualify as Band A feeders. These feeders only service 15% of total electricity customers connected to the feeders”.

The former Chairman, Manufacturers Association of Nigeria (MAN), Frank Onyebu, expressed shock over NERC’s decision.

“My first reaction was disbelief, total disbelief. This couldn’t be true. I thought that this had to be one of those social media fabrications. There’s no way our government could be so insensitive to slam this kind of tariff on manufacturers.

“Band A, which by the way, is populated by mostly manufacturers. It is manufacturers who are going to bear the brunt of this totally ridiculous tariff hike!

“I am really lost for words. I can’t believe that anyone could even contemplate such a thing at a time when most of our members are barely keeping afloat. This is the height of insensitivity. This could, in fact, be the final nail on the coffin of manufacturing in this country.

“I just hope that the government will have a rethink. I also hope that, in the future, the government would strive to consult manufacturers on issues that affect them. We all need to understand the implications of an extinct manufacturing sector to the economy of our country. We need to realize what harm would befall the country if half of the existing manufacturers fail.

“We are already living with the effects of high unemployment on our security. The security situation would get a lot worse if many factories shut down and more people are forced into the unemployment market. We also have to think about the impact of factory closures on government revenue. A shut factory cannot pay taxes! It is in our collective interest as a nation that the government quickly rescinds the very insensitive tariff hike” he explained.

Also speaking, a former Chairman of the Renewable Association of Nigeria, Mr. Segun Adaju, said the latest hike by NERC has further shown that the current pricing mechanism was not cost reflective.

He said this remained one of the major challenges in the sector that is scaring away investors, assuring that with this increase, there should be hope for new investments.

But to create a sustainable option for consumers, Adaju said that Nigerians should begin to explore the option inherent in renewable energy, especially solar which, he said, is more cost reflective than grid power.

Also commenting, the Managing Director, Idfon Power Engineering Consultants (iPEC) Limited and former Chief Technical Officer of FGN Power Company, Idowu Oyebanjo said that if NERC is increasing power based on regular supply of electricity, how would it monitor that a customer who’s supposed to have 20  hours does not get less?

“It’s meant for just only a few people who are on Band A. The only challenge I have there is, how do you ensure that those customers get 24-hour supply? There are things the distribution companies can do to ensure reliable and safe supply and we can help them to achieve this”, he said.

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