Despite requests for its reversal, the Federal Government insisted on Friday on the 240% rate increase that electricity users in the band "A" category must pay.
It also disclosed that the short-term, subsidized electricity pricing system will be followed by a three-year transition plan to a fully cost-reflective tariff.
The Nigeria Labour Congress, however, was not pleased with the decision and advised the Federal Government to be ready for the fallout from the tariff hike, calling it "wicked" and "unpopular." The Congress further emphasized that the government should be prepared because it chose to heed the World Bank and International Monetary Fund rather than its own advice.
One Saturday PUNCH, NLC Head of Information Benson Upah stated, "We did say earlier that this tariff hike is insensitive and unpopular." Therefore, I'm convinced the government is equally ready to face the repercussions of its actions if it decides to carry out the increase or other wicked deeds.
"We also stated that this will harm enterprises and create a more hostile atmosphere, as the manufacturers are claiming. No manufacturing has ever benefited from high electricity tariffs anywhere in the globe. Not in the developed world, either.
Therefore, the minister's boldness in declaring that the policy will not change is beyond comprehension. This implies that neither the President nor the Minister are in command. That the minister chose to follow an unpopular course of action is heartbreaking.
"It demonstrates that the minister and the President are not in charge," Upah continued. The World Bank and the IMF are in command. They are the ones implementing this really harmful policy.
Thus, our leaders need to be ready for the fallout from this extremely harmful policy. That's all I have to say for now on this matter.
The Federal Government authorized and announced the tariff rise that around 1.9 million customers would have to pay on Wednesday, and manufacturers and organized labor had protested.
In the case of consumers in the band A category, which makes up around 15% of all 12.82 million power users nationwide, the electricity subsidy was discontinued entirely.
At a press conference hosted by NERC in Abuja, the government revealed the rise in energy prices. It said that individuals impacted would now pay N225 per kWh, as opposed to the previous cost of N68/kWh, or a roughly 240 percent increase.
According to the government, the choice became operative on April 3, 2024.
However, the Trade Union Congress, NLC, and the Organised Private Sector protested the increase in electricity user tariffs and called for the decision to be overturned.
They claimed that the pricing increase would drive small and medium-sized businesses out of business, aggravate inflation, and force manufacturers out of business. They also claimed that no area in Nigeria now enjoys up to 20 hours of electricity supply every day.
Those with a daily electrical supply of up to 20 hours are classified as band A power consumers.
Adebayo Adelabu, the Minister of Power, stated at a news conference in Abuja on Friday that the Federal Government will stick with the new rate system for Band A customers in spite of requests to reverse it.
He emphasized that the government would have to pay around N2.9 trillion in energy subsidies by 2024 and stated that this was because the government could no longer afford to pay such enormous amounts as power subsidies.
The minister declared, "We are under a price system known as subsidy pricing, in which a significant amount of the cost of generating, transferring, and distributing power is covered by the government.
"I must inform you that, as of right now, prior to the imposition of the rate hike, the government of Nigeria is subsidizing at least 67% of the expenses associated with generating, transferring, and distributing energy in the country.
According to the current currency rate, this will equal N2.9 trillion in 2024. This represents almost ten percent of the federal budget. The government must handle several industries, the electricity industry being only one of them.
"It will be very insensitive on our part to force or compel the government to continue to subsidise at the rate of almost N3tn for the power sector alone," stated Adelabu, who claimed that other ministries and sectors were in competition with one another for government funds. All we need to do is exercise consideration and realism.
He stated that the government will save over N1.4 trillion by eliminating the band A consumer subsidy and that this money would be used to advance other industries including health, education, and construction.
Although the minister pointed out that the power subsidy would only last temporarily, he maintained that the rate rise was pro-poor because the majority of people impacted were residents who could pay the expense.
He claims that the removal of the power subsidy from band A subscribers is only the beginning of the Federal Government's three-year strategy to stop providing subsidies for electricity.
"Our policy thrust of maintaining a subsidized pricing regime in the short term or the short term with a transition plan to achieve a full cost-reflective tariff over a period of, let us say, three years" is what he said in reference to the tariff review.
We at the Ministry of Power and our agencies are treating this as more of a test project. It is akin to a proof of concept that the people who own the infrastructure required to provide consistent electricity and experience 20 hours of light would be the ones to receive a tariff increase.
AEDC is fined by NERC
Contrary to the direction that only consumers on band A should pay the higher rate, the Abuja Electricity Distribution Company Plc imposed the new cost of N225/kWh to all consumer bands under its franchise regions within two days of the tariff rise.
For breaching its Supplementary Order on the April 2024 Multi-Year Tariff Order, NERC hit the company with a N200 million punishment.
NERC had to step in after several AEDC customers complained on Friday that they were not on band A and that their prices had increased to N225/kWh.
One client, Mr. Yakubu, just introduced himself and stated, "Interesting moment in Nigeria." I purchased an electricity token for N9,900 on Tuesday, April 2, 2024, and I received 135 units in return.
"Today, April 4, 2024, I purchased an electricity token for N9,900, receiving 40 units, in order to verify my placement in the NERC and AEDC social strata categorization of power consumption. There was no electricity available all night. Is it accurate to say that I'm liking band A, 20 hours of supply?
"The Nigerian Electricity Regulatory Commission has taken enforcement action against the Abuja Electricity Distribution Plc for non-compliance with the Supplementary Order to the April 2024 Multi-Year Tariff Order 2024 for the AEDC," the power sector regulator said in a statement in response to the development.
Due to their noncompliance with the recommended consumer band categories for tariff invoicing, the AEDC was fined ₦200,000,000.
"The AEDC had applied the new tariff to all customer bands, contrary to the order, which was designed to ensure fair billing practices," it was discovered via a thorough investigation and user comments, which led to this judgment.
According to the commission, this meant that the AEDC had to do the following: "a. Pay back all clients in bands B, C, D, and E, respectively, who were invoiced beyond the permitted customer categories/tariff bands specified in the order.
"b. Reimburse by giving the impacted consumers the remaining customer tokens they are entitled to at the relevant prices; all token reimbursements must be given to the impacted customers before April 11, 2024.
c. Pay N200,000,000.00 as a fine for the egregious violation of the commission's directive. d. By April 12, 2024, provide documentation to the commission attesting to your adherence to the instructions in a and c.
Atiku opposes the raise
The Peoples Democratic Party's presidential candidate for 2023, Atiku Abubakar, has forewarned the Federal Government that raising energy prices will worsen the situation for Nigerians.
In a statement he personally signed on Friday, Atiku said that the hike in energy rates would make things worse for the people, especially because inflationary pressures were rising.
Before enacting any changes, he cautioned the Federal Government, in particular NERC, to identify the underlying causes of inefficiency in the electricity industry.
Part of the statement said, "As per usual, the administration is implementing more reforms without providing enough advance notice or a suitable post-reform strategy to lessen the blow.
The removal of PMS subsidies and the floating of the national currency have left Nigerians facing severe hardships, which coincide with the hike in energy rates.
"Up until now, the administration has failed to effectively address the difficulties arising from the execution of those policies. The residents would face more challenges as a result of the power bill increase since inflationary pressures are rising. The effects on our industrial sector will also be detrimental. They are paying more for petrol, paying more interest on their bank loans, and earning more money overall because of the increased minimum wage. The folks under the president are driving the economy toward an even more dire situation. His changes lack a human element.
Prior to implementing any changes, it is crucial that we comprehend the underlying causes of the inefficiencies in the electricity industry. It is time to take another look at the privatization process that led to the Discos.
"Tinubu needs to make sure that these reforms are implemented in the right order, (b) take steps to lessen the pain, and (c) hold the NERC accountable for guaranteeing better service delivery."
Legislators' fault increase
The House of Representatives Minority Caucus demanded that the federal government pressure NERC to revoke the most recent nationwide increase in power rates.
The Minority Leader of the House, Kingsley Chinda, referred to the raise as inhumane and immoral in a statement released in Abuja on Friday. He said that it would put an excessive weight on the already stressed population, worsening economic problems and enlarging the gap between rich and poor.
We encourage Mr. President Bola Tinubu to persuade the power regulator, NERC, to retract this decision and prioritize the welfare of the people, according to a portion of the statement.
In order to address the underlying causes of the inefficiencies in the energy industry and guarantee lasting solutions that benefit all stakeholders—rather than a steady and continuous increase in tariffs—transparent communication and participatory decision-making procedures are essential.
"We want greater responsibility and openness in the way resources are managed in the power industry. The right to reasonable pricing policies that take into account their financial circumstances and effective service delivery are granted to all citizens.
Groups respond
The energy pricing rise was criticized by Obinna Ogbonna, a former president of the Joint Health Sector Union, and Georgewill Enefaa, the chairman of the South-South United Action for Democracy and the Rivers State Civil Society Organizations.
Enefaa stated that given the nation's economic circumstances, it was improper for the government to permit a rise in the price of power.
"This current administration represents capitalism, which is purely profit-oriented," he declared. Its design prioritizes profits over the well-being of the populace.
It is really pitiful and demonstrates the government's extreme insensitivity to the fact that it is unable to supply other energy sources, such as petroleum.
"They chose to boost electricity generation, one of the important methods of production, during a period when the nation's production is declining. It is, to put it mildly, cruel and savage. The simplest reason is that this administration wants to draw as much blood as possible from Nigerians' veins.
Ogbonna denounced the pricing hike, claiming that it came at a time when Nigerians were still dealing with the consequences of the gasoline subsidy reduction.
He continued by saying that it seemed like the Federal Government was experimenting with the economy and gave President Bola Tinubu and his economic team advice on how to directly correct it.
Magaji Sani, the president of the Nigeria Automobile Technicians Association, stated that the rise will have terrible effects on the organization's members.
He said that before discussing raising tariffs, the Federal Government of Nigeria should focus on providing dependable energy to its citizens.
"The implications of this increase in the price of electricity will be severe," he declared. First of all, there is no electricity. All that people do is manage what little they can see and add to it with generators. Increasing rates is what they are talking about, not repairing the electrical supply first. It must be of high quality if you want to sell something.
Everything in the nation is now highly costly, which is a difficulty. People are still getting used to the present inflation, and now you are raising the price of power. It's really regrettable. The administration was chosen by the people, thus it is unfair for them to suffer hardships in their daily lives. We are requesting that the government stop the hike.
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