Nigerians on Monday did not agree with the Nigerian Electricity Regulatory Commission's decision to lower the price that Band A customers have to pay for electricity from N225/kWh to N206.8/kWh.
The Nigeria Labour Congress, Trade Union Congress, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, electricity consumers and civil society organisations, in separate interviews with The PUNCH, called for the reversal of the increase to the previous subsidy rates.
The new price change that was announced on Monday happened 33 days after the NERC increased the electricity prices for Band A customers from N68/kWh to N225/kWh, which is about a 240 per cent raise.
The subsidy on electricity was completely removed from the prices for customers in the Band A category, who make up about 15 per cent of the total 12.82 million power consumers across the country.
As a result of the price increase, the Federal Government said it would save N1.5tn.
The government said the decision started on April 3, 2024, and mentioned that Band A customers would have up to 20 hours of power supply every day.
However, the House of Representatives, organized labor, and the Nigerian Bar Association objected to the increase in prices that about 1.9 million consumers have to pay.
The House of Representatives urged the NERC to immediately stop the implementation of the new electricity prices all over the country, while organized labor gave a two-week deadline for the prices to go back to what they were.
Nevertheless, the Minister of Power, Adebayo Adelabu supported the increase during an investigation session by the Senate Committee on Power last week, and argued that there would be a countrywide power outage in the next three months if the increase in electricity prices was not put into effect.
Despite the opposition to the new price order, the spokesperson for the power ministry, Florence Eke, said to The PUNCH on Sunday that the new prices are permanent and the government will not give in to public pressure.
However, 24 hours after Eke's statement that the price increase would not be reversed, the NERC stated in a release that there was an eight per cent decrease for band A customers, and said that this was because of changes in economic indicators in April, particularly the strengthening of the naira against the dollar in the foreign exchange market.
The commission pointed out that the decision was made after a thorough examination of the economic indicators and exchange rate changes.
In response to the NERC's directive, the Abuja, Ikeja, and Ibadan electricity distribution companies among others, announced a reduction in their prices accordingly.
Discos comply
The Ikeja Electricity Distribution Company said in a notice, “Dear valued customers, please be informed of the reduced price of our Band A feeders from N225/kWh to N206.80/kWh effective 6th May 2024 with guaranteed availability of 20-24hrs supply daily. The price for Bands B, C, D, and E remains the same”.
Also, the Ibadan DisCo informed its customers about the tariff slash, saying, “Customers using prepaid meters will be the first to experience the revised price – N206.80/kWh whenever they purchase this month of May. While for post-paid customers, the revised price will show in the electricity bills to be received at the end of May 2024”.
In the same way, the Port Harcourt DisCo along with its Eko, Abuja, Kano and Kaduna counterparts said they had all put the tariff cut in place to show the new order.
The NERC showed its commitment to keeping a regulatory environment that balances the consumers' interests with the sustainability of the electricity supply industry.
It stated that the reduction in tariff was part of its ongoing efforts to make sure that electricity stayed affordable for Nigerians while also promoting efficiency and improvement in service delivery by the distribution companies.
The statement said, “Under the tariff methodology adopted by the Nigerian Electricity Regulatory Commission, a revised tariff order covering the month of May 2024 has been issued by the commission to the 11 electricity distribution companies.
“The commission has considered changes in the macroeconomic parameters over the preceding month of April 2024 and especially the appreciation of exchange rates – consequently the commission has approved a downward review of end-user tariffs for Band “A” customers from NGN225/kWh to NGN206.8/kWh.
“The commission reaffirms its commitment to providing a balanced and effective regulatory regime serving the needs of the Nigerian Electricity Supply Industry.”
In an interview with The PUNCH, the NERC Public Affairs General Manager, Dr Usman Arabi, revealed that the tariff cut was due to the recent rebound of the naira against the dollar at the foreign exchange market.
“The Band A tariff has been reduced from N225 to N206.80/kWh, and it is basically because of the exchange rate. The exchange rate has come down. It is just basically because of the exchange rate.
“You know, exchange rate, inflation and the price of gas are the micro indices for the determination of the tariff. The exchange rate has come down, so the tariff also invariably came down,” Arabi stated.
When asked if the tariff will go up again if the naira falls against the dollar, Arabi expressed optimism, saying, “We are praying that the exchange rate would continue to come down. That is our prayer, and I am sure that is the prayer of everybody.”
In response, the National Deputy President of the TUC, Tommy Etim, said, “It is unacceptable. All we want is a total reversal and stakeholders’ engagement.”Also commenting, the National Treasurer of the NLC, Hakeem Ambali, noted, “This is still a far cry from labour expectation; until there is a significant increase in power supply, any increment is unjustifiable.”
The President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Dele Oye, argued that the Discos could not justify the recent tariff hike and, as such, needed to engage stakeholders on the matter to reverse it.
The NACCIMA boss said without engaging key stakeholders like industries, consumers, and trade associations, justifying any pricing formula would be tough.
He said, “By their action, they are showing that the initial increase was arbitrary. Until you engage with real stakeholders, the industry, consumers, and trade associations like chambers of commerce, it will be very difficult to justify any pricing formula.”
Additionally, electricity customers represented by the Electricity Consumer Protection Advocacy Centre demanded a complete reversal rather than a small reduction.
Mr Princewill Okorie, the leader of the group, stated that the government decided to increase the tariff to please the DisCos without considering the consumers' opinions.
He mentioned that the government should have made gas available to the power-generating companies since the country has plenty of it, and he cautioned against selling gas in dollars at the local market.
Okorie emphasized, “We are asking for a reversal. What is the distinction between N206 and N225? Why won't the Federal Government make gas available?
“Why can't the government devise a policy to reserve a certain percentage of gas for the power sector to alleviate the complaints about gas? Why should gas be paid for in dollars in Nigeria?
“We have abundant gas, and there's no reason why gas should hinder electricity production. The outstanding debts and other issues are all related to the challenges of gas supply. The crucial step is to allocate a specific quantity of gas for electricity production.’’
Okorie emphasized the need for a complete overhaul of the power sector, stating that the wealthy in Nigeria were oppressing the poor.
“They will not make decisions that will impact the capitalists and the wealthy, but they will turn a blind eye and make decisions that will penalize the poor. Who owns the gas companies selling gas in dollars?
“Why is it hard to invest in making the power sector functional? Why is it always easy for them to increase tariffs? Why does the government base its decisions solely on what the DisCos tell them without consulting consumers?” he questioned, urging the government to revert to the subsidy regime for the tariff.
James Ugochukwu, Co-Convener of Situation Room, suggested that simply reducing electricity tariffs would not solve the underlying issue. Instead, he advocated for the government to comprehensively address energy problems, ensuring sufficient fuel and diesel supply, and empowering states to develop their own power sources.
Ugochukwu said, “A caring government should be more concerned about the hardships of its people in light of the declaration they made on May 29, 2023, when they came into power.
“Nigerians are grappling with high fuel prices and now an increase in electricity tariffs. We are suffering from the rising cost of living.
“The Band A consumers, such as manufacturers, are facing difficulties in their businesses, which is impacting the cost of living in the country.
“Lowering the electricity tariff will not change anything. The Federal Government should resolve the energy issue so that Nigeria can have sufficient fuel and diesel to power its operations. They should also empower other states to establish their own independent power plants.”
Additionally, Olaseni Shalom, the Coordinator of the Atulunse Initiative, expressed concern about the serious situation in the country and urged the government to prioritize finding solutions to the economic crisis.
Shalom stressed how important it is to focus on making things in our own country and attracting money to help the economy grow.
He said, 'The problems in the power and energy sector are the same problems affecting all the important parts of the economy because of really high inflation. It's a terrible situation in our country.'
He said, 'Nigerians need to push our government to find answers to the economic situation we're in. We need to focus on making things here and getting money invested in our country.'
Rotimi Olawale, the Executive Director of YouthHub Africa, pointed out that the government hasn't been able to make sure there's always enough electricity or help with the costs in that sector. He said that not being able to pay the higher prices for electricity should be seen as a human right.
'The government has shown that it can't effectively and efficiently give help with paying for electricity, and continue to give the best services.'
'That's something that's really clear now, and if we want private companies to invest in the electricity sector, the pricing has to be good enough for them to make back the money they put in. So, in some ways, I support pricing that makes it appealing for investment to come into the sector.'
‘Total reversal impossible’
But Bolaji Tunji, the minister of power’s Special Adviser on Media and Communication, said the main problem in the industry is not having enough money, and the only way to fix that is to have prices that match the costs.
He argued, 'If people want to completely go back on the prices, then we don't really want the industry to do well because we have to pay the gas companies. The money has to come from what we make.'
'Can the government keep paying over N2tn every year for help? No! What about the debts we already have? These are serious concerns. These debts are really hurting the industry.'
He added, 'If they now say the prices should go back, no, they can't go back, unless we want to keep having no electricity; because the investors will leave, and they won't be able to keep their businesses going.'
'It will take us back to where we were before. If people say we should go back to the old ways, it means we don't want the industry to do well. If we want this sector to keep going, people have to pay,' he said.
He said that the pricing of gas in dollars is a big worry for the ministry, but gas in the international market is sold in dollars.
He said the minister had a meeting with the Minister of State for Petroleum (Gas), Ekperipke Ekpo, to figure out how to make sure gas keeps getting to the power companies so there isn't a problem with not having enough gas.
‘We are looking at how we can have a continued supply of gas to the GenCos. The meeting with the gas minister is still happening to fix the issue of not having enough gas,’ he said.
Gabriel Idahosa, the President of the Lagos Chamber of Commerce and Industry, talked about how the electricity market is slowly getting better, and this could lead to more price changes in the future.
He said that the NERC's decision to reconsider its previous position may be linked to a significant change in the electricity usage patterns of consumers since the new tariff was announced.
Idahosa explained, “It is a gradual maturing of the electricity market. NERC has deregulated the market. So, each market can now determine its price. Eko Disco can determine their prices; Ikeja Electric can determine their prices.
“Each operator will assess their local market and evaluate the efficiency level and pricing that can generate more revenue because they have observed that many people are no longer comfortable using energy as before due to the N225 price.
The Chairman of the Nigerian Economic Summit Group, Mr. Niyi Yusuf, mentioned that the NERC's adjustment was timely and a positive development.
“The rise in forex rates is the reason NERC provided for the slight reduction. While this adjustment by NERC is timely and favorable, it is important to note that the industry requires a suitable tariff that can support investments and operations in both the short and long term. This is the challenging task that still needs to be addressed,” Yusuf added.
He repeated the need for appropriate tariffs to sustain investments and operations in both the short and long term.
“I would prefer that we concentrate on obtaining suitable tariffs that can support investments and operations in both the short and long term. At the N206 per kilowatt, and if available, it should help to lower the average power cost for most businesses based on a power mix of different sources, including generator, solar, gas, public grid among others,” he highlighted.
NANS shelves protest
The National Association of Nigerian Students has also called off its planned nationwide protest in response to the reduction in the power tariff.
The student body had scheduled a nationwide strike due to the increase in electricity tariff and the recurring fuel scarcity.
A statement signed by the Senate President of the Body, Akinteye Babatunde, mentioned that the students suspended the strike following engagement with the government.
It stated, “We announce the suspension of the proposed national protest aimed at addressing the fuel scarcity crisis and demanding the resignation of key officials in the Nigerian National Petroleum Corporation Limited and the Ministry of Power.
“The government has reached out to us to initiate dialogue and has provided assurances that measures will be taken to end the fuel scarcity crisis and also promised improvement in electricity supply before the end of next week.’’
“While we remain vigilant in our pursuit of accountability and good governance, we believe that engaging in dialogue presents an opportunity to address our concerns through constructive means.”
NANS stated that its demands were not driven by personal animosity towards the NNPCL GCEO and the Minister for Power, but by its responsibility as a pressure group to hold the government accountable for its actions.
“We recognize the importance of keeping government officials accountable and ensuring transparency in the management of our nation’s resources,” the group stated.
