Increase in Electricity Tariff, PMS Bad for Housing Industry, Says NIOB


Bennett Oghifo

The housing industry would be adversely impacted by the recent increase in electricity tariff and in the upward review of the cost of premium motor spirit, popularly known as petrol, the Nigerian Institute of Building (NIOB) has said.

A statement by the National President of NIOB, Bldr. Kunle Awobodu said, “The federal government through its agencies might have adduced reasons for these increases, such as appropriate pricing based on market forces, (but) the Nigerian Institute of Building (NIOB) finds it necessary to explain the unintended effects of such increases on the construction industry that produces our housing and other infrastructure stock.”

NIOB said, “Increasing electricity and petroleum costs will further drive up production, distribution and transportation costs. The disposable incomes and purchasing power of Nigerians are further reduced. Without appreciable construction activities, employment challenges remain hydraheaded.

“It is our considered view that reversing the recent increases will do the critical masses and Nigeria’s economy and, especially the construction industry good. Increased construction activities will benefit both the government and the citizens.”

The Institute said the construction industry engages a lot of actors, including professionals, artisans, and business organisations such as contractors, materials manufacturers, equipment manufacturers or leasing organisations. Many of the organisations are small medium enterprises that remain the engine room of growth in national economies. The use of the construction industry to grow national economies cannot be overemphasised.”

They said, “A cursory survey of some building materials manufacturers would reveal that many are closing shops on account of cost of production combined with the harrowing effect of the COVID-19 pandemic. Increasing energy costs will further asphyxiate the few that are still surviving. The implication of this scenario on improving our housing stock for example is better imagined.

The government or any other stakeholder may stimulate a scenario for the production of some inputs such as doors for large number of housing projects. A shocker may be exposed: the capacity to even meet those elementary needs would be seen to remain low. Meanwhile, what the nation needs at this time is ability to look inwards in line with the government espoused policy pronouncements and executive orders on local content.

“Bringing to fore the NIOB past market survey, a 50kg bag of cement rose from N1,600 to N2,000 and steel reinforcement bars ( locally manufactured TMT) from N135,000 to N140,000 due to hike in fuel prices from N65 to N120 per Litre in 2012. The increase in fuel price from N120 to N145 in 2016 resulted in the rise of cement price to N2,300 per 50kg bag and steel bars to N180,000 per tonne.

“Just before this current upward review of fuel price to about N151.56, a 50kg bag of cement sold for N2,600 while steel bars was N230,000 per tonne. Sadly, these two prominent building materials are being manufactured locally, thereby questioning the rationale behind backward integration and local content policies.

“From the NIOB archive, hikes in fuel prices always led to price increases in building materials. Hence, it does not require a Nostradamus to predict inflation in the prices of building materials with the latest increase in fuel price.

“Invariably, workers who have been saving to relocate to their own houses will still have to tolerate their landlords for a long time to come. Shattered dreams in a hopeless low cost housing programme of the government.”