Fed govt directs NERC to stay action on electricity tariffs hike

From Isaac Anumihe, Abuja

Amidst the hostile reaction created by the hike in electricity tariffs, the Federal Government has directed the Nigerian Electricity Regulatory Commission (NERC) to put on hold the implementation of the hike.

The latest development comes as stakeholders are displeased over what they maintain is an ill-timed and unacceptable action that affects Nigerians.

In a statement, Minister of Power Engr Saleh Mamman said that even though it is not the role of the government to interfere in the decisions of NERC, he is, however, directing NERC to forestall the implementation of the duly performed minor review (which adjusted tariffs between N2 per kWh and N4 per kWh) until the conclusion of the joint ad hoc committee’s work at the end of January 2021.

‘This will allow for the outcome of all resolutions from the committee to be implemented together.
It should be clear to all that the regulator must be allowed to perform its function without undue interference. The role of the government is not to set tariffs, it is to provide policy guidance and an enabling environment for the regulator to protect consumers and for investors to engage directly with consumers. Bi-annual minor reviews to adjust factors such as inflation are part of the process for a sustainable and investable NESI ( Nigerian Electricity Supply Industry),’ he said.

Mamman promised that the government would continue to fully subsidise 55 per cent of on-grid consumers in bands D and E and maintain the lifeline tariff for the poor and the underprivileged.

‘Those citizens have experienced no changes to tariff rates from what they have paid historically (aside from the recent minor inflation and forex adjustment). Partial subsidies were also applied for bands A, B and C in October 2020. These measures are all aimed at cushioning the effects of the pandemic while providing more targeted interventions for citizens.

‘The public is aware that FGN and the Labour Centers have been engaged in positive discussions about the electricity sector through a joint ad-hoc committee led by the Minister of State for Labour and Productivity and co-chaired by the Minister of State for Power.

‘Great progress has been made in these deliberations which are set to be concluded at the end of January 2021. Some of the achievements of this deliberation with Labour are the accelerated rollout of the National Mass Metering Plan, clampdowns on estimated billing, improved monitoring of the Service-Based Tariff and the reduction in tariff rates for bands A to C in October 2020 (that were funded by creative use of taxes),’ he said.

Meanwhile, stakeholders are still breathing violence over the hike saying that the tariff increase would impact negatively on the purchasing power of Nigerians.

The President of the Senior Staff Association of Electricity and Allied Companies (SSAEAC), Dr Chris Okonkwo, told Daily Sun that the hike is unacceptable to labour because the purchasing power of consumers is low and cannot accommodate the hike.

‘It is still not acceptable to Labour because earnings are too low for the additional cost. Additional costs impact negatively on purchasing power and price of goods,’ he said.

Similarly, the former Commissioner of Finance, Imo State and a professor of CapitaI Market, Nasarawa State University, Keffi, Uche Uwaleke think the increase is ill-timed.

In his opinion, NERC’s action has the potential to escalate inflationary pressure.

‘I think it is ill-timed. Much as having in place a cost-reflective tariff is in the long term interest of the power sector due to its potential to attract investors, implementing such a reform now would be counterproductive.

‘Nigerians are just coming to terms with increases in VAT and the pump price of fuel. An increase in electricity tariffs will not only worsen the inflationary pressure but is also capable of diminishing productivity of households as well as firms that may find it difficult to pass it on to consumers on account of the current economic recession.

‘I think, the implementation should be postponed till the country attains full economic recovery and the current pandemic effectively contained,’ he suggested.