The Nigeria Labour Congress (NLC), Trade Union Congress (TUC), and the Organised Private Sector have expressed strong opposition to the latest increase in electricity tariffs for customers in the Band A category. This hike, driven by the depreciation of the naira against the US dollar, rising inflation, and other economic factors, was approved by the Nigerian Electricity Regulatory Commission (NERC).
On Wednesday, distribution companies such as Ibadan Electricity Distribution Company, Eko Electricity Distribution Company, and Kaduna Electricity Distribution Company announced an increase in their tariffs for Band A customers from N206.80 per kilowatt-hour to N209.50/kWh. Despite the seemingly small increase, it has been met with significant backlash from organized labor, private sector operators, and consumers alike.
Reasons Behind the Tariff Hike
Francis Agoha, acting General Manager of the Ibadan Electricity Distribution Company, explained that the adjustment was necessitated by several key economic indicators, including fluctuations in the exchange rate, the current inflation rate, available generation capacity, and the cost of gas. These factors have significantly impacted operational costs, and the new tariff aims to mitigate these financial pressures while continuing to deliver high-quality electricity services.
Impact on Band A Customers
Agoha emphasized that the adjustment only affects Band A customers, with tariffs for Bands B, C, D, and E remaining unchanged. He acknowledged that the rise in tariffs could be a concern for customers but insisted that the increase was necessary to maintain and improve service quality.
Kaduna Disco also announced an upward review of the tariff for Band A feeders, effective from July 1, 2024. They assured customers on Band A feeders of continued availability of 20-24 hours of daily electricity supply as stipulated in the Service Based Tariff regime.
Subsidy Concerns
The hike in tariffs is partly attributed to the rise in monthly electricity subsidies from N102.30bn in May to N158.53bn in June. The increase in subsidies was driven by the rising cost of the dollar against the naira and accelerating inflation. In April, NERC raised Band A tariffs to N225 per kilowatt-hour from N68, with the exchange rate and inflation rates playing significant roles in these adjustments.
Industrial Response
The National Vice President of the Nigerian Association of Small-Scale Industrialists, Segun Kuti-George, warned that the move could lead to additional shutdowns of industries. He highlighted that any increase in input costs would translate to higher manufacturing costs, making locally made goods less competitive with imports from countries like China. This could lead to reduced profits, layoffs, and increased crime rates.
Kuti-George called for the unbundling of the power sector to allow competition, similar to the telecoms sector, to drive down costs and improve service quality. The President of the Association of Small Business Owners of Nigeria, Dr. Femi Egbesola, also emphasized that the tariff hike would negatively affect the private sector, potentially pushing struggling businesses over the edge and leading to higher inflation and job losses.
Voices from the Labour Unions
Various labor unions, including the Nigerian Union of Banks, Insurance and Financial Institution Employees, the National Union of Electricity Employees, and the Nigeria Labour Congress, have vowed to resist the tariff hike. They argue that the increase adds an extra burden on Nigerian workers and the general public during a time of economic hardship.
Calls for Government Action
The Director-General of the Lagos Chamber of Commerce and Industry, Dr. Chinyere Almona, called for decisive and multifaceted action to stabilize prices and support citizens’ purchasing power. The NLC and TUC have criticized the lack of consultation with civil society and organized labor before implementing the tariff hike, calling for a more transparent and inclusive process.
Conclusion
The recent hike in electricity tariffs for Band A customers has sparked widespread protest from labor unions, the private sector, and consumers. While the adjustment aims to address rising operational costs, it has raised concerns about affordability and the broader economic impact. The call for a more competitive and transparent power sector continues as stakeholders push for policies that support economic growth and stability.
