It’s time to work on alternative sources of power supply, argues Ayo Oyoze Baje
“The price of power is responsibility for the public good.” -Winthrop Aldrich
Coming at a perilous period of a second wave of the debilitating COVID-19 pandemic and a second economic recession in five years, the recent increase in electricity tariff by 50 per cent by the Nigerian Electricity Regulatory Commission (NERC) says much about the inhuman and anti-people policies of the current administration! “Haba, have Nigerians not suffered enough?” a concerned citizen ventilated his anger as soon the increase in the electricity tariff became a news item.
Of course, we have. If we are not battling against the increase in Value Added Tax (VAT), it is that of the incessant increase in the pump price of petrol in a so-called oil-producing country. One does not need rocket science to understand the domino effects such aberrant increases have on the cost of living here in Nigeria. The price of foodstuffs has skyrocketed. It has affected that of transportation, healthcare delivery, house rents, communication, even as Nigerians battle against sundry bank charges. So, what is the role of government if it cannot protect its citizens against all forms of insecurity, or provide for their welfare but takes a bizarre interest in pauperizing the populace?
With the New Year one had expected a paradigm shift, in terms of the government coming up with palliatives and economic buffers to take the stress off the shoulders of long-suffering Nigerians. But it has become patently obvious that our policymakers and those who implement them are out of tune with the harsh reality of the negative effects of their leadership failure on the human development index(HDI) of the people.
What with Nigeria’s economy slipping into its second recession in five years as the gross domestic product contracted for the second consecutive quarter. That was as of November, 2020. According to the National Bureau of Statistics the nation’s GDP recorded a negative growth of 3.62 per cent in the third quarter of 2020. The country had earlier recorded a 6.10 per cent contraction in the second quarter. It is the nation’s second recession since 2016, and the worst economic decline in almost four decades. With such a scary economic situation, increasing the burden on the people should never have been an option.
But electricity distribution companies started 2021 with a further increase in electricity tariffs. This followed a new order issued by the Nigerian Electricity Regulatory Commission (NERC) instructing DisCos to increase tariffs effective January 1, 2021. The order was signed by the new NERC Chairman, Sanusi Garba.
While Nigerians were still trying to understand what it all meant, the NERC issued a public notice explaining the tariff increase. “The Commission hereby states unequivocally that NO approval has been granted for a 50% tariff increase in the Tariff Order for electricity distribution companies which took effect on January 1, 2021.” The increase in tariffs followed a suspension of an earlier order issued in August increasing tariffs starting September 1, 2020. However, a threat by Labour to go on a nationwide strike forced the government to suspend the tariffs for two weeks ending October 15th, 2020.
The federal government and the organized labour then agreed to provide a tariff relief of N10.20 per kilowatt-hour for Nigerians for the next three months and also distribute six million free meters following the completion of the two weeks suspension of electricity tariff. But in November 2020, the electricity distribution companies (DisCos) began implementation of a service-based reflective tariff (SRT) structure nationwide after receiving approval from President Muhammadu Buhari.
The latest tariff hike suggests all customers will see their tariffs increased regardless of the band unlike in the previous order where tariff class D & E was frozen. Customers on Tariff Class A, B, and C will see their tariff go back to the tariff order released on September 1st, 2020. Some of these customers will see their tariff increase by as high as 120% compared to the pre-September 1st MYTO 2020 levels.
Customers in tariff classes D & E who are those with less than an average of 12 hours of electricity daily also saw their tariff increase albeit slightly and not up to the levels originally included in the September 2020 tariff order. In general, Nigerians (including businesses) will see their tariffs rise by as much as 75% depending on the distribution companies. So, who and what are we to believe?
Expectedly, the Manufacturers Association of Nigeria (MAN) has rejected the tariff hike. That is understandable because the increase has come to compound the challenges the members face while trying to generate their electric power, distribute and market their products along decrepit roads, multiple taxes, influx of imported goods, and operate under an economy with low purchasing power.
Yet, most of MAN-member companies were classified in the ‘D’ categorisation (D1, D2, and D3). This means that ‘Industrial Consumers’ belong to where the tariff is the highest. According to the General Secretary of the Federation of Informal Workers’ Organisation of Nigeria (FIWON), Comrade Gbenga Komolafe the tariff increase is “absolutely insensitive, thoughtless and disdain for the people”. The Director-General of Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, said “for investments to thrive in the power sector cost-reflective tariff was inevitable. The alternative was for the government to subsidize it”. The latter is the way to go.
The issue of unreliable power supply remains a major hindrance to Nigeria’s economic growth, identified as the second biggest obstacle to doing business in the country, after a lack of access to finance. It also costs the country an enormous amount of money. Quoting Nigerian government data, the International Monetary Fund (IMF) says that a lack of access to reliable electricity costs Nigeria an estimated $29 billion a year. Nigerians spend an estimated $14 billion a year on small-scale generators. Millions of Nigerians, households and organizations have resorted to fossil-fueled generators. The situation comes with environmental and health risks, too.
Working on alternative sources of electric power generation, away from fossil-fuel that are safer such as solar, wind, recycled wastes, coal and even the ocean tides, is long overdue. Perhaps, with holistic restructuring of the country and a review of the extant laws on electric power generation and distribution, sustainable solutions would be available to the people of Nigeria.