No to proposed electricity tariff increase

 

That the federal government has finalized plan to hike electricity tariff by 40 percent effective July 1^st, at a time majority of Nigerians are grappling with the negative repercussions of the sudden fuel subsidy removal on May 29, by the new administration of President Bola Ahmed Tinubu, on account of dwindling federal revenue, is not only provocative, insensitive and callous but will further impoverish the masses in the country.

 

We, are therefore totally against such increase because of the prevailing serious hardship in the land, further aggravated recently by the over 150per cent increase in the pump price of premium motor spirit (PMS), the liberalization of the Foreign Exchange Market that resulted in over 100per cent devaluation of the national currency, the attendant inflation rate and hike in the prices of goods and services, weakened purchasing power of the average Nigerian including the millions of workers and completely antithetical to the primary responsibility of government which is the security and welfare of citizens.

 

It is also totally inconceivable that the All Progressives Congress, APC-led government that came to power on a manifesto of ‘Renewed Hope’ and a promise to eradicate the excruciating suffering in the land is in less than a month in office contemplating inflicting more devastating hardship on the electorate through the imposition of an ill advised policy capable of igniting a major crisis.

 

In case the new administration has forgotten, we recall quite vividly that most citizens especially the over 130 million multi-dimensionally poor ones went through hell before May 29 on account of both an unprecedented fuel scarcity and the Naira Redesign Policy of the Central Bank of Nigeria, CBN, under the suspended Governor Godwin Emefiele which shoddy implementation claimed many lives and condemned last weekend in Paris by the Tinubu. The President at his first Diaspora engagement said, “the financial system was rotten. Few people were making away with our money … that is gone now; the man (Emefiele) is in the hands of the authorities”.

 

Sadly, it must also be pointed out that the above twin evil also took place under an APC-controlled administration of the immediate President, Muhammadu Buhari, who doubled as Petroleum Resources Minister for eight years without either building a refinery or repairing any of the existing moribund four ones after expending trillions of Naira yet no official of the ministry has been summoned for interrogation by the anti graft agencies, the Economic and Financial Crimes Commission, EFCC and the Independent Corrupt Practices and other related offenses Commission, ICPC to account for the humongous taxpayers’ money wasted.

 

Rather, the Federal Government citing revenue shortfall, recently dropped the hint of the imminent removal of the N50 billion monthly electricity subsidy in the energy sector, and its decision to subsequently increase the power tariff in July notwithstanding the potential adverse effects and the fact that the move is coming few weeks after the President removed petrol subsidy which has skyrocketed the prices of commodities, food items and transport cost by over 200 percent thereby making life more difficult for most Nigerians.

 

Regrettably also, a report by the National Bureau of Statistics (NBS) indicated that Nigeria’s inflation rate for May 2023 rose to 22.41% from 22.22% recorded in April even though the effects of subsidy removal would bite harder in June since the federal and state governments are yet to evolve palliatives or policies to mitigate the suffering.

 

We however note with satisfaction, that before making the planned hike public, Tinubu had signed the 2023 Electricity Bill into law which amongst others provides a framework for the improvement of access to electricity in rural, unserved, underserved, peri-urban and urban areas through the use of conventional sources and renewable energy off-grid and mini-grid solutions, authorizes states, companies and individuals to generate, transmit and distribute electricity and repeals the Electric Power Sector Reform Act (EPSRA) which was enacted in 2005 under ex-President Olusegun Obasanjo in 2005. The EPSRA provided the legal, regulatory and governance frameworks underpinning the Nigerian Electricity Supply Industry (NESI).

 

The new law further “consolidates all legislations dealing with the electricity supply industry to provide an omnibus and ideal institutional framework to guide the post-privatization phase of the Nigerian Electricity Supply Industry and encourage private sector investments in the industry” while under the new law, states have been empowered to issue licenses to private investors who have the ability to operate mini-grids and power plants such that state licenses are not to extend to inter-state or transnational distribution of electricity.

 

Significantly too, to create a market for renewable energy and stimulate investments in the sector, electricity generating companies will be mandated to either generate power from renewable energy sources, purchase power generated from renewable energy or procure any instrument representing renewable energy generation even as the Electricity Act similarly mandates the imposition of renewable purchase obligations on distribution or supply licensees.

 

What the new law simply means in our view, is that the monopoly hitherto at play in the all important energy sector has been broken for good and more level playing space created for private investors both local and foreign as well as governments to participate actively in the electricity generation, transmission and distribution chain across the country, an area previously dominated by the government and its agencies since independence in October 1960.

 

In other words, rather than provide the right incentives and conducive environment for the prospective investors to come in and invest massively considering that Nigeria generates less than 5,000 megawatts (MW) of electricity as against South Africa’s total domestic electricity generation capacity of 58,098MW from all sources, the federal government clearly made a wrong decision by proposing a 40percent hike as a first step, to be borne by consumers even though supply remains epileptic and the cost of alternative (fuel) for generators prohibitive.

 

It is against this backdrop that we wholeheartedly agree with the stand of the Nigeria Labour Congress, NLC that the “issue of capacity to pay and quality of service delivery are not only  germane  but superior to any rationalisation by market logic” before contemplating any hike even as the “inherent risk in the  new regime of tariff is that there is no control, implying that by August, consumers” may be compelled to pay new rates since the sector is deregulated, and given the dwindling fortune of the Naira against major international currencies

 

Besides, the other risk according to the Congress, is that by the time “other product or service-rendering entities come up with their new prices or rates, the ordinary person would have been compacted into dust” while there are no socio-economic safeguards put in place by governments to alleviate the inevitable adverse additional consequences the proposed tariff  hike would have on Nigerians.

 

Again, the recent media reports indicating that the Federal Government is set to increase the salaries of the President, the vice president, the judicial workers and others by 114 percent portrays the new administration as very insensitive to the current social and economic challenges facing the people.

 

It is our view therefore, that the planned review in tariff be shelved in the collective interest of the people even as we challenge the President and Governors to urgently embark on reducing the high cost of governance at the federal and state levels by cutting down on the remuneration and allowances of public office holders in the country,  implement programmes that will ameliorate hardship associated with fuel subsidy removal and intensify negotiation with organized labour for a considerable increase in the current N30,000 new minimum wage. We strongly believe that implementing the proposed electricity tariff hike is capable of plunging more Nigerians into multidimensional poverty bracket and ignite a major crisis in the country.