Electricity Tariff Hole Will Worsen Living Conditions, Cost of Business, Say Afenifere, Lagos, Abuja Chambers of Commerce

The pan-Yoruba socio-political and cultural organisation, Afenifere, and the Organised Private Sector (OPS), including the Lagos Chamber of Commerce and Industry (LCCI) and the Abuja Chamber of Commerce of Industry (ACCI), have expressed grave concerns over the recent hikes in electricity tariff for Band ‘A’ customers by the Nigerian Electricity Regulatory Commission (NERC).

The Senate Chief Whip, Senator Ali Ndume, who represents Borno South in the National Assembly, has also condemned the hike in electricity tariff, describing the timing as wrong.

This is as NERC on Saturday directed the power distribution companies to refund all overbilled Band ‘B’ customers by April 11.

In their separate reactions to the tariff hike by the apex regulator of Nigeria’s power sector, the groups said the decision would worsen the living conditions of Nigerians and also increase the cost of doing business in the country.  

The LCCI expressed its view in a statement titled: ‘The Rising Cost of Doing Business in Nigeria,” where it argued that the rise in electricity tariffs and the decision of the Central Bank of Nigeria (CBN) to hike the Monetary Policy Rate (MPR) from 22.75 per cent to 24.75 per cent would make the costs of living and doing business in Nigeria unbearable.

The statement, which was signed by the Director General of LCCI, Dr. Chinyere Almona, said the two decisions were compounded by the difficulty in the importation and clearing of goods in the country’s ports.

“Feedback from businesses and analysts suggests that these moves will inflict severe pain on the private sector, further exacerbating the already challenging economic environment,” she said.

According to Almona, “The recent hikes in the MPR have directly translated into higher interest rates, making it more expensive for businesses to access credit for working capital, expansion, and sustainability.

“We have consistently advised that rate hikes alone will not curb inflation without resolving the challenges of the real sector of the economy. The real sector has demonstrated the capacity to create more jobs, manufacture products for consumption and export, and sustain the industrial base of the economy.

“While we understand that high-interest rates attract Foreign Portfolio Investments (FPIs) and local investors to treasury bills and bonds, we lament the drying up of funds away from the private sector to government treasuries.”

The chamber acknowledged that the removal of the subsidy on electricity supply was to attract foreign investors into the sector with a cost-reflective tariff.

But it also insisted that it had “also advocated that we subsidise production instead of consumption.

“However, our major concern is seeing businesses pay heavily for the services that they do not enjoy optimally. It is a grave concern that with a higher cost of power, companies are still not having access to the service.

“We call for an aggressive metering programme that leads to 100 per cent coverage of electricity consumers.

“This guarantees liquidity for the distribution companies and gives more satisfaction to consumers with a feeling of paying for what they consume,” she said.

“We are concerned that businesses will face double jeopardy in paying a higher electricity tariff and another cost in providing a private electricity supply,” she added.

In a separate reaction, ACCI has also raised the alarm that the recent increase in electricity tariffs could negatively impact the ease of doing business in Nigeria.

The President of ACCI, Mr. Emeka Obegolu, said in Abuja yesterday that the hike would significantly impact businesses across the various sectors of the economy.

Obegolu expressed worry that the Small and Medium Enterprises (SMEs), which are crucial to the country’s economy, would be greatly affected by the hike in tariff.

“The ease of doing business is a critical factor for fostering economic growth, attracting investments, and creating job opportunities.

“Regrettably, the increase in electricity tariffs can hinder these efforts by imposing additional financial burdens on businesses, especially SMEs, which are the backbone of our economy,” he said.

On its part, Afenifere has accused the Ministry of Power and NERC of forcing Nigerians to pay for their inefficiency.

 In a statement issued on Saturday by its National Publicity Secretary, Jare Ajayi, Afenifere stated that the 300 per cent electricity tariff increase would thwart President Bola Tinubu-led administration’s effort to boost the economy as businesses would shrink. 

The group wondered how businesses could flourish as desired by President Tinubu when the amount to be paid per kilowatt hour (kWh) of electricity jumped from N68 to N225 just within 24 hours of its announcement.  

It added: “If the relevant government agencies are to be sincere with Nigerians, what they should do is to first ensure regular and efficient supply of electricity before acceding to increase in payment for services that are being poorly rendered. 

“A rough calculation indicated that a person on Band A who was paying an average of N50,000 per month (on N68 per kWh) would now have to pay N170,000 for the same service. Note the increase!

“It is noteworthy that the ministry and its agency, the NERC, are interested in the revenue that would be generated rather than first ensuring regular and efficient supply. This is in contradiction to the claim that the government agencies care about the pains of Nigerians,” Afenifere added. 

Timing of Tariff Hike Wrong, Ndume Insists

Ndume, who also rejected the new tariff, said that Nigerians were yet to recover from the removal of fuel subsidy.

In a statement he issued on Saturday, the former Senate leader called on the federal government to reconsider its position in the interest of Nigerians, adding that Nigerians were already facing many challenges, including unprecedented inflation, poor purchasing power, insecurity, and other hardships.

According to Ndume, the federal government should focus on providing stable electricity first to Nigerians, reducing inflation, stabilising the naira, reducing food prices, and providing other basic amenities to Nigerians before increasing the tariff.

Ndume said: “The news of the increment came to me and many of my colleagues as a shock. It also came at a time when the National Assembly was on a break. I think the timing of this hike is very wrong. Nigerians are grappling with many challenges.”

However, despite the complaints, NERC yesterday insisted that the electricity tariff for Band ‘A’ customers, Nigeria, remains the 4th cheapest among 18 countries surveyed in Africa.

In a Frequently Asked Questions (FAQ) released by the organisation, it stressed that despite the perceived high prices of on-grid electricity, it remains the cheapest and most reliable compared to other alternatives.

NERC Directs Discos to Refund Overbilled Consumers Within Four Days

Meanwhile, NERC on Saturday directed the power distribution companies to refund all overbilled Band ‘B’ customers by April 11.

This directive followed complaints from customers, who are not on Band ‘A’ but reported that they were being made to pay N225/KWh for electricity.

The federal government had last Wednesday said they would no longer pay subsidies on electricity consumed by Band ‘A’ customers.

It, however, directed that other customers would continue to pay the old rates.

But as the Discos upgraded their payment platforms, some customers on Bands B, C, D, and E said they were made to pay N225/KWh instead of the old tariffs.

Following these complaints, NERC has directed all distribution companies to refund the affected customers.

NERC also directed that “all DisCos shall ensure that only the newly approved Band A feeders listed in their April 2024 supplementary orders are maintained as Band A for the purpose of vending to prepaid customers and billing for postpaid customers on their networks”.

The DisCos were also required to immediately post on their websites the schedule of approved Band A feeders that have been affected by the rate review.

“All DisCos shall set up a portal by April 10, 2024, on their website that allows all customers to check their current bands by entering their meter or account numbers.

“All customers wrongly billed at the new rate should be refunded through energy tokens not later than Thursday, April 11, 2024, and file evidence of compliance with the commission by April 12, 2024,” the NERC added.

Emmanuel Addeh, Adedayo Akinwale and Dike Onwuamaeze 

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