The recent uproar over the staggering 230.8 percent increase in Electricity Tariffs for premium power consumers nationwide has not deterred the federal government’s plans. Despite the public outcry, the government has hinted at extending similar measures to every Nigerian with access to on-grid electricity, aiming to convert the entire power sector into a single band from the current six. This move would see cost-reflective prices fully implemented over the next three years. During a weekly briefing organized by the Ministry of Information in Abuja, the Minister of Power, Chief Adebayo Adelabu, defended the tariff hike as the first step towards completely removing subsidy payments in the power sector.
He emphasized the government’s commitment to gradually phasing out underpayments for bands B-E and lifeline, ensuring a more sustainable economic model. This decision has met with strong opposition from various quarters. The Northern Elders Forum (NEF), former Vice President and presidential candidate Atiku Abubakar, and President of the Nigeria Labour Congress (NLC) Joe Ajaero have all criticized the government’s move. They argue that such a drastic increase in electricity tariffs places an unbearable financial burden on the already struggling population, further widening the gap between the rich and the poor.
This hike in tariff was condemned by stakeholders.
NEF, in a statement signed by its Director of Publicity and Advocacy, Abdulazeez Suleiman, described the tariff hike as a betrayal of trust by the government. They highlighted the exorbitant costs that ordinary Nigerians would face, making 24 hours of electricity per day unaffordable for many. Similarly, Atiku Abubakar condemned the tariff hike, stating that it would create more difficulties for citizens and exacerbate inflationary pressures. He criticized the lack of a post-reform plan to mitigate the impact on the populace, calling for a revisit of the Privatization exercise that led to the current situation.
NLC President Ajaero raised concerns about the lack of energy availability despite multiple tariff increases over the years. He questioned the government’s energy policy and called for a re-evaluation of the privatization agenda in the power sector. In response to the tariff hike, the Nigerian Electricity Regulatory Commission (NERC) has also taken action against Electricity Distribution Companies (DisCos) found violating customer classifications. The Abuja Electricity Distribution Company (AEDC) was fined ₦200 million for noncompliance, emphasizing the need for fair billing practices and customer protection.
FG remains firm on its decision to transition in the next few years.
Despite these criticisms and regulatory actions, the government remains firm in its decision to transition to a fully cost-reflective tariff over the next few years. While the short-term implications are causing concern and public outcry, the government believes that the long-term gains in terms of sector Sustainability and investor attractiveness will outweigh the current challenges. The ongoing debate over electricity tariffs reflects deeper issues within Nigeria’s power sector. Years of underinvestment, inefficiencies, and a lack of clear policy direction have contributed to the current situation.
Privatization, which was intended to improve efficiency and service delivery, has faced challenges in implementation, leading to persistent issues such as inadequate power supply, high distribution losses, and billing discrepancies. Critics argue that before implementing further tariff increases, the government should address these underlying structural problems. This includes tackling issues such as gas supply constraints, inadequate infrastructure, and regulatory inconsistencies. Without addressing these fundamental issues, simply raising tariffs may not lead to the desired improvements in service quality and sector viability.
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On the other hand, proponents of the tariff hike argue that it is a necessary step towards aligning electricity prices with the actual cost of production and distribution. They argue that subsidies, while initially beneficial for consumers, have created distortions in the market and discouraged Investment in critical infrastructure. By gradually phasing out Subsidies and moving towards cost-reflective tariffs, they believe the power sector will become more attractive to investors, leading to improved service delivery and reliability over time.