Electricity Tariff Hike: Power Ministry, NERC Forcing Nigerians To Pay For Inefficiency – Afenifere

  • Says increase will thwart FG’s efforts at boosting economy

The pan-Yoruba socio-cultural organization, Afenifere, has decried the 300 percent hike in electricity tariff in the country, saying that the development would cause businesses to shrink and also make nonsense of the efforts by the federal government at boosting the economy as businesses will shrink.

It particularly noted that one of the reasons given for the hike in electricity tariff was an increase in the price of gas being purchased by electricity generation companies (Gencos) from $2.18 to $2.42 as announced by the Nigerian Midstream and Downstream Regulatory Authority (NMDPRA).

Afenifere stressed that a simple arithmetic showed that the percentage of gas increase is not the same as the one announced for electricity tariff which is over 200%, adding that it was clear that rather than exploring ways to reduce the cost of producing energy thereby reducing the pains of Nigerians, the relevant government agencies are more interested in passing the price of their inefficiency on the people.

The organisation noted that for instance, an increase in the cost of gas was used as the reason for the hike in electricity tariff.

Accordingly, the pan-Yoruba cultural group called on “state governments to as a matter of necessity, expedite action in establishing their electricity power plants since they now have the power to do so.

These were contained in a statement by Comrade Jare Ajayi, National Publicity Secretary of Afenifere, in which it noted that as recent as Thursday, April 4, 2024, President Ahmed Bola Tinubu while hosting some members of the business sector in Aso Rock Villa, underscored the role that private sector plays in an economy.

Afenifere therefore 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.

The Nigerian Electricity Regulatory Commission (NERC) on Wednesday, April 4, 2024, announced that electricity consumers on Band A would begin to pay N225 per kilowatt hour as against the N68 they were paying.

Musliu Oseni, the Vice Chairman of NERC who made the announcement, said that only those enjoying 20 hours of electricity supply or more (out of 24 hours a day) were affected by this increase.

Afenifere faulted the position of NERC, stressing that it was erroneous to state that only those who are direct enrollees in a particular Band utilize the power being supplied through that band.

It said; “For instance, a Band A consumer is likely to have people in his/her household or place of work where the power is being consumed. This means that if 1.5 million is the figure the government has as enrollees on Band A, the number of people who depend on the power coming therefrom would be about five times that figure.

“Besides, by calling on players in the power sector to ensure that people get what they are paying for is like putting the cart before the horse,” it stressed.

Afenifere noted that the sing-song virtually everywhere now is the poor supply of electricity and low quality of the commodity sometimes, adding that 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.

It further said; “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 contradistinction to the claim that the government agencies care about the pains of Nigerians.

“Yet, it is clear that even the present cost of producing gas, and by implication electricity, can be made more efficient. In other words, both the price of gas, as well as electricity, would be far lower than what they are presently if the agencies concerned had gone into research and/or take advantage of available information on cost-efficient production of energy.

“For instance, a report by Pricewaterhouse Cooper (PWC) indicated that “harnessing Nigeria’s proven gas reserves can stimulate an estimated Gross Value Added (GVA) of US$18.3 billion annually to the domestic economy. In addition, optimizing the domestic utilization of gas could support 6.5 million Full Time Equivalent (FTE) jobs for the local economy” (from the Executive Summary of a 2020 Report of PWC titled ‘Evaluating Nigeria’s Gas Value Claim’.

Afenifere noted that from the foregoing, it means that were relevant government agencies up to their responsibilities, not only would the costs of producing gas and electricity be cheaper, but millions of people would also be employed directly and indirectly.

It also noted that studies have revealed that natural gas, wind, and solar are the cheapest sources of electric energy, stressing that it was therefore surprising that the Ministry of Power and its agencies could not go in this direction and/or encourage generating and distribution companies to go in that direction.

Afenifere also said; “Beyond the above, it has been established that with adequate investment in gas exploration, Nigeria could become the gas powerhouse of Africa. But at the moment, with gas production standing at an average of 2.53 trillion cubic feet (tcf) in about two decades, it means that what is being extracted for proper utilization is less than one percent of Nigeria’s reserve. What is the power ministry doing in this respect?

“When, in 2013, the federal government unbundled the Power Holding Company of Nigeria (PHCN) into power generation companies (GenCos) and distribution companies (DisCos), it was with the expectation that the energy sector in the country would be as obtained in countries from where such facility was introduced to Nigeria. But alas, what have we been having – lamentations!

“The situation became so bad that many Nigerians were nostalgic for the days when the government was handling the power issue directly. No appreciable value seems to have been added to what they inherited from PHCN. Unfortunately, the government (through its relevant agencies) that was supposed to ensure that we get the best does not seem to be keen.

“As the experience from the subsidy on petrol has shown, those who suffer from the government’s withdrawal of subsidy are not necessarily those who benefitted from it. The victims would be average Nigerians who would patronize services being rendered or items being produced by high-power users since they (the latter) would easily pass the higher cost onto their customers.

“What Nigerians are suffering for today – and what they are being forced to pay for – is the failure of the relevant government agencies to discharge their responsibilities to the people – Research, innovate, move with the time, etc,” it said.

Afenifere also noted that broadcasting stations were forced to migrate to Frequency Modulation (FM) from Short Wave Band just as computer users had to move from desktop to laptop, saying that the same can be done in the power sector as the in-thing today is solar, wind and gas.

It further said; “But the appropriate government agencies are disappointing Nigerians. Rather than look for means of taking Nigerians to the modern-day power technology, they chose to be milking the people. The way things are now, no effort should be spared in making the exploration of gas, wind and solar more efficient for the purpose of generating energy etc”.

Afenifere therefore called on President Tinubu to compel the Ministry of Power, to reverse the present hike, go into alternative energy sources like solar and wind, review the terms with which the 2013 exercise was carried out and be more innovative.

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