Following the 240 per cent electricity tariff hike for Band ‘A’ customers by the federal government, households are now bracing up for tougher times, thereby calling for policy reversal.
Recall that NERC had on Wednesday announced the approval of an increase in the electricity tariff of Band A customers from about N66 to N225 per kilowatt hour for the various distribution companies (DisCos) in the country, which represents an increase of 240 per cent.
Vice chairman NERC, Musliu Oseni, while making the announcement had also emphasised that the increase in tariff will only affect customers enjoying 20 hour power supply and above across the country.
This is just as the Minister of Power, Dr. Adebayo Adelabu said yesterday that the federal government expects to spend about N2.9trillion on electricity subsidy in 2024.
He said the government is still subsidizing 85 per cent of electricity supply in the country despite increase in tariff for Band A customers.
He said the government remains pro-poor in its power policy because it is subsidizing nothing less than 67% of the cost of producing, transmitting, and distributing electricity in Nigeria.
He said the government is not ready to aggravate the sufferings by refusing to adopt 100% withdrawal of subsidy on electricity,
Adelabu spoke at the Fourth Ministerial Briefing in Abuja with the Minister of Information and National Orientation, Mr. Mohammed Idris.
“And I must tell you that as at today, before the introduction of the tariff increase, government is subsidizing nothing less than 67% of the cost of producing, transmitting, and distributing electricity in Nigeria.
“At the current exchange rate this is going to translate into N2.9trillion for 2024. This is more than 10% of the national budget.
“Power sector is just a single sector out so many Sectors that government has to attend to. We have the works, we have housing, we have education, we have health, we have defence and so on and so forth that are all competing for this merge revenue from the government.
“So, it will be very insensitive on our part to compel government to continue to subsidize at that rate of almost N3trillion for the power sector alone. We just have to be realistic and considerate.”
Adelabu insisted that only 15 % customers were affected by the increase in tariff for those in Band A Category.
He said the tariff review has favoured about 85 per cent of electricity customers in the country.
He said: “Electricity is no longer cheap for Band A. But this policy is pro -poor. It is pro-poor. The high- end people, they are the ones that are enjoying the subsidy more than others because they consume more. This is because what they are enjoying is more than what the poor are enjoying. We are saying no, let them pay the right price, and let the poor breathe too.
Adelabu said although the subsidized pricing regime was in transition to a full cost reflective tariff, the government will continue to protect the poor.
Commenting on the tariff increase the chief executive officer(CEO) of the Centre For The Promotion Of Private Enterprise(CPPE), Dr. Muda Yusuf, said the quantum of the increase is on the high side and could be very burdensome to the citizens who fall into the Band A categorisation.
This categorisation is not a question of choice, unfortunately, said Yusuf.
He said, however, for those who can afford it, it will bring some relief and would save them the trouble of buying diesel, generator maintenance and noise pollution and could even be cheaper than running a diesel generator.
Yusuf had noted that the power sector issue has become a major conundrum in the economy as there is a major funding and liquidity crisis which is posing significant risk to investments in the electricity value chain.
Similarly, the group executive chairman of Lancelot Group, Adebayo Adeleke said: “it is worrisome to see that the various arms of governments, especially the executive arm, that is where you have Ministries, Departments and Agencies are not working together. They are not working together in harmony and they are supposed to be seen to be implementing policies.”
He noted that, “for one arm of the government to say, we are granting increments and for another arm of the government, the regulatory function, to say no and we are talking about sanction, it clearly shows that they are not working in harmony.”
Adeleke said, this is a signal that some of the pronouncements and policies of the government are not well thought through, saying, “and most of the time, critical stakeholders are not carried along. Because if they were well thought through and critical stakeholders were carried along, we will not have two different arms of the same government failing discordant tools.”
Many householders and businesses are already lamenting the impact of the huge increase in electricity for Band A customers, which became effective on Wednesday April 3, 2024.
For instance, Mrs. Edith Ologeh, is a fashion designer with five children and two in the university.
Ologeh is using proceeds from the business to support her husband to take care of the household in the face of excruciating economic conditions exacerbated by removal of petrol subsidy, escalating cost of living pushed up by exchange rate upward movement.
She relies on stable and affordable electricity to sustain her business and train her children.
When she heard about the tariff adjustment, it was like an end to her business had come. She has prayed that God will intervene because her area of residence was categorised into the band ‘A’.
She is using a part of her apartment as her shop due to the cost of renting a business outlet.
Ologeh, told our Correspondent that the current bill, if not reversed, will deal a blow to her business and called for reversal to enable her sustain herself and family.
Another consumer, Chukwuma Uzoma, runs an eatery and drinking bar in a small village in Maryland, called Onigbongbo. Uzoma relies on sustainable and affordable electricity to chill his drinks to be able to attract patronage. He said, with the new tariff hike, he would rather contemplate shutting down but wondered what will befall his family.
A consumer, Silvanus Okpara’ stated that, “For businesses, especially small and medium enterprises (SMEs), an increase in electricity tariffs will lead to higher operational costs coupled with the fact that so many things are on the high side right now. This will have an adverse impact on their businesses, competitiveness and profitability, potentially leading to job cuts or reduced expansion opportunities.”
He urged the government to ensure that vulnerable populations are not disproportionately affected even as he felt it is disheartening that government policies are done in a rushed manner.
Speaking also, a project manager, Adeniyi Julius noted that the increment will affect low-income families who found themselves in the category of those that would be affected as they are already financially strained.
According to him, “Low-income families may find it challenging to cope with higher electricity bills. This could lead to decreased usage of electrical appliances, affecting their quality of life and productivity.” He, however, said the social and political implications can not be ruled out as Nigerians are going through a lot.
Electricity is a basic necessity, and any perceived unfairness in tariff increases can lead to public discontent and protests, he stressed.
Similarly, a resident of Gbagada, Lagos, Blessing Oladipo, said she was not in support of the increase in the electricity tariff. She queried “is it the light that is almost nonexistent they are increasing the amount per kilowatt? Or which one because she doesn’t know what else to say? I don’t even know what they are trying to do.
“For hours and days, we could not see a blink of light. We use prepaid metres. Since the beginning of February, we have hardly seen light. Phones and other appliances will be off for hours without a power source. I don’t know if you may ask others if their story is different, but for me, that has been my experience, and I do not buy into it.”
Also an Ogun State resident, Ola Michael said, increasing the electricity tariff is not a prudent decision at present. “It would place undue strain on the populace given the current state of the economy. Furthermore, the inadequate lighting situation is unlikely to encourage compliance with any proposed price hike:” he said.
These and many more electricity consumers in this category are currently at a dilemma on whether to shut their business or continue to hustle the new payment.
Credit: Leadership