Manufacturers and organized Labour have vehemently opposed the Federal Government’s decision to increase the tariff payable by electricity users enjoying a 20-hour power supply by 240 percent.
They have called for the continuation of electricity subsidies, arguing that removing the subsidies would force manufacturers out of business and worsen inflation.
The subsidy on electricity has been completely withdrawn from the tariff payable by power consumers in the Band A category, which constitutes about 15 percent of the total number of power users across the country.
The government announced the tariff hike at a press briefing in Abuja by the Nigerian Electricity Regulatory Commission (NERC) on Wednesday. According to the new order, those affected will now pay a tariff of N225 per kilowatt-hour, up from the previous rate of N68/kWh.
However, the organized private sector, the Nigeria Labour Congress (NLC), and the Trade Union Congress (TUC) have kicked against the tariff hike for power users, whether they are in Band A or not.
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They argue that the hike will force manufacturers out of business, worsen inflation, and stifle small and medium enterprises. They also dispute the claim that any place in Nigeria enjoys up to 20 hours of power supply daily.
Band A power users are those who receive up to 20 hours of electricity supply daily and paid about N68/kWh before the implementation of the latest order by the Federal Government through NERC.
NERC Vice Chairman, Musiliu Oseni, stated that the government could not sustain the electricity subsidy and had to devise ways to cut down the approximately N2.9 trillion that would be spent on power subsidy this year.
He explained that customers on Band A represented 15 percent of the over 12.82 million registered electricity consumers across the country, and the commission had downgraded some customers in this band.
Oseni said the downgrading of some Band A customers to Bands B and C was due to the non-fulfillment of the required hours of electricity provided to them by power distribution companies in their respective franchise areas.
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He noted that customers affected by the latest tariff hike would now pay their power bills completely by themselves, as the applicable subsidies on Bands B, C, D, and E would not be enjoyed by them.
The NLC described the decision of the Federal Government to hike the electricity tariff as insensitive and callous, warning that it would further impoverish consumers, especially workers whose wages are fixed and insufficient.
The TUC also criticized the government, saying it was only concerned about revenue generation to the detriment of the survival of citizens. They stated that the hike in tariff was unacceptable and a recipe for individual unrest.
The President of the Lagos Chamber of Commerce and Industry (LCCI), Gabriel Idahosa, warned that companies would start laying off workers due to the increased operational costs.
The Manufacturers Association of Nigeria (MAN) described the development as “unpleasant,” indicating that it would issue a statement on the matter.
In summary, while the tariff hike is seen as necessary to align energy costs with market realities, there are concerns about its timing and potential impact on businesses and consumers, especially in light of the current economic challenges facing the country.
