DOMINIC IGWEBIKE ELECTRICITY WORKERS SCRIBE SAYS HIKE IN TARIFF ABSURD
By Dominic Igwebike
National Union of Electricity Employees (NUEE) is one of the critical stakeholders in the electricity sector, it has been our major concern to see the delivery of constant, sustainable, clean, and affordable Electric Power to our dear Nation.
There hasn’t been any meaningful improvement since after the privatization of the Power Sector. The country has an installed capacity of about 14,000MW but generates about 4,803MW. Meanwhile, Nigeria needs at least 30,000MW to reach sufficiency.
The recent hike in electricity tariff from N68 /kwh to N225 /kwh is absurd in a country where the majority of the masses are grappling with basic survival and an electricity access rate of about 55%.
The justification given by NERC is that the hike is attributed to only Band A consumers who make up only 15% of electricity consumers and utilize 40% of the nation’s electricity consumption. It begs to understand the sensibility of the person(s) that uttered such a statement, purporting that it would not affect the general public.
They need to answer these questions: Who are the Band A consumers? What do they do? Who are the customers of the Band A consumers? Who bears the brunt of the electricity hike?
The general public is the one that will be most affected by this. They are the customers and end- users of Band A products and services. The additional costs will be transferred to the common man, so they are indirectly being exploited, notwithstanding their dwindling purchasing power and increasing impoverishment.
Let’s look at these 2 scenarios:
1. Company A uses 1000 kwh of energy in manufacturing and works for 24 hours a day, with the
current hike, his daily energy cost will increase from N50,592,000 to N167,400,000 which is an additional direct cost of N116,808,000 i.e 231% not to mention the increase in the cost of their inputs as the costs of those will also be increased by the producers to accommodate their own increase. The price of Company A in Band A products will go up by about 300% and those in Band Z where there is no transformer will buy at the increased price. If they buy at a higher price, they are the ones paying the almost 300% increase, not the manufacturer purported to be taxed.
2. Company B increased the price of their products in line with their new economic reality, consumers don’t have the purchasing power to buy at the new rate, and Company B will close down. As Company B closes down, some of its peers facing the same economic challenge will follow suit, and then unemployment will increase. If that happens, insecurity will be on an upward trend, and then the government will spend more than the money made in fighting insecurity, which we haven’t been able to get hold of.
The increased cost of goods will make Nigerian-produced goods unattractive as imported and smuggled items will be far cheaper than it. People will resort to those goods, thereby fueling the economy and employment situation of the countries of import. Our manufacturing and business sectors will become comatose.
The two scenarios above show that the hike in the electricity tariff is grossly detrimental to the economic diversification, growth, and well-being of Nigerians.
This is why the US, UK, France, Germany, and all developed economies support their factories with billions invested in power subsidies. Why is Nigeria different? Electricity in Egypt is an average of N21.68 per kwh, and in South Africa, it is N226 per kwh. The minimum wage in Egypt is N78,360, while in South Africa, it is N328,395. The minimum wage in Nigeria is N30,000, while the new electricity tariff is N255 per kwh. A country that genuinely has the interest of its people at heart
and wants to grow. We will ensure that the real sector is given the most support it can get, not putting a nail in its coffin.
Furthermore, the safety of our members is at stake, as they are at risk of being attacked by people in the community when they visit for disconnections of light.
The Minister of Power and NERC did not consult with the stakeholders in the sector before the increase. The Minister of Power has relegated himself as the spokesperson for the DISCOs where he is justifying Cost Reflective Tariffs. What of Service Reflective Tariffs as it relates to consumers? We as a stakeholder don’t know the energy policy of this present administration.
As a critical stakeholder in the Power Sector who is concerned with Nigerians getting constant and affordable power supply, we state categorically that the hike in the electricity tariff is not beneficial to Nigerians and should be withdrawn.
Yours in Industrial partnership,
Dominic Igwebike
Ag. General Secretary
