On Friday 4th September, 2020, the leadership of the Organised Private Sector of Nigeria (OPSN) met with the Buhari Administration through the Special Adviser to the President on Infrastructure for extensive discussions on the increase in electricity tariff which took effect on 1st September, 2020. The OPSN-comprising of the Nigerian Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA), the Manufacturers Association of Nigeria (MAN), the Nigeria Employers’ Consultative Association (NECA) the Nigerian Association of Small and Medium Scale Enterprises (NASME), and the Nigerian Association of Small Scale Industrialists (NASSI), had called on President Buhari’s Government to Justify the necessity for this tariff increase at a time when the economy is facing a potentially deep recession and Nigerians are facing increasing hardships, with unemployment rising to over 27% as many factories are facing total closure.
The Special Adviser informed the meeting of the serious financial quagmire in which the Government has found itself which has made it impossible for the Government to continue to sink hundreds of billions of Naira into the Electricity Industry without any positive improvement in the supply of electricity to consumers. He informed the OPSN heads that over the past five years, subsidy on electricity has skyrocketed from N165 billion in 2015 to over ₦500 billion in 2019 superseding the FGN budgetary allocations to health and education combined. These figures were also confirmed from the recent Senate Committee on Power’s Investigative hearing in June, 2020.
After extensive discussions during the meeting, the Chairman of the OPSN and president of NACCIMA, Hajiya Saratu Iya Aliyu’s lead team and the presidency agreed on the below points:
- The subsidy situation is simply unsustainable. And if allowed to continue, the electricity industry will collapse as the government no longer has the fiscal capacity to sustain the increasing subsidy level and at the same time finance the capital investment necessary to extend electricity supply to the over 90 million Nigerians who lack access to electricity.
- It is therefore necessary to create conditions that will attract private investment in the Industry for which cost reflective tariff is inevitable.
- It is however imperative that the confidence of electricity consumers must be inspired and they must be assured that the new tariff regime will lead to significant and sustained improvement in the quantity and quality of electricity supply.
- The new tariff structure must be transparent, charges must be fair and consumers must be able to verify that they are paying only for what they consume.
- Government must compel distribution companies(DISCOS) to massively invest in a metering program that will totally eliminate estimated billing which they (DISCOS) routinely resortto, to extort money from consumers to boost their revenue and make up for their chronic inefficiencies. The metering program through Central Bank, to fund locally made meter manufacturing bulk purchase should be accelerated;
- Measures that should ease the burden of industrial consumers must be implemented even if as temporary arrangements. This is to enable them to sustain operations and remain competitive without resorting to laying off employees. Such measures as the Eligible Customer Scheme, which has been approved by NERC but has been blocked by Distribution Companies must be allowed to come into play without any further delay;
- In the interest of the increasing number of Nigerian workers who are facing retrenchment under the prevailing high cost operating environment, the Government must explore all avenues for supporting industries to remain viable. Such measures should include but not limited to:
- Prevailing on the CBN to review its recent decision on payments of imports;
- Reviewing the current policy on border closure;
- Helping to resolve the current dispute between the Manufacturers Association of Nigeria and Distribution Companies which has resulted in a never- ending litigation holding back the utilization of over 5000MW of Stranded Electricitywhich is not deliverable to consumers;
- Government must prevail on NERC to be more firm and fair in dealing with stakeholders in the electricity supply market.
- The OPSN agreed to further engage with the Nigerian Electricity Regulatory Commission to discuss issues and concerns and formally present recommendations in relation to the power tariff. This should include high quality service focused on industrial clusters and business hubs; and
- Finally it was further agreed that the OPSN would continue to engage the Government through the Presidency, Ministry of Power, NERC and other key agencies to continue deliberations and provide feedback on the monitoring of the implementation of the Service Based Tariff structure.