Manufacturers And Labor Unions Clash With Government Over 240% Electricity Tariff Hike

Manufacturers and organized labor have vehemently opposed the Federal Government’s decision to increase electricity tariffs by 240%, particularly for users benefiting from 20-hour power supply. They emphasize the necessity of retaining electricity subsidies, cautioning that their removal could cripple manufacturers and exacerbate inflationary pressures.

The elimination of electricity subsidies, particularly for Band A consumers, who represent roughly 15% of total power users nationwide, has stirred discontent among stakeholders. The government’s announcement of the tariff hike, disclosed by the Nigerian Electricity Regulatory Commission (NERC) during a press conference in Abuja, has triggered widespread resistance.

The private sector, Nigeria Labour Congress, and the Trade Union Congress collectively reject the escalated tariff, arguing that it threatens to drive manufacturers out of business, escalate inflation, and impede the growth of small and medium enterprises. Additionally, they contest the government’s assertion of 20-hour daily power supply, insisting that such coverage is not the reality across Nigeria.

Band A consumers, previously charged approximately N68/kWh, now face a tariff surge to N225/kWh, marking a substantial 240% increase. NERC Vice Chairman, Musiliu Oseni, rationalized the government’s move, citing the unsustainability of electricity subsidies and the need to mitigate the projected N2.9 trillion subsidy expenditure for the year.

Oseni disclosed that the downgrade of certain Band A customers to Bands B and C stemmed from inadequate power supply by distribution companies, as assessed through technological means. Consequently, only a fraction of distribution company feeders qualify as Band A, affecting fewer than 15% of customers.

Affected consumers will be solely responsible for their electricity bills, as subsidies applicable to Bands B, C, D, and E will not extend to them. Oseni also highlighted plans for expedited metering for the unmetred 20% of Band A consumers, acknowledging the necessity for rapid implementation due to the revised tariff of N225/kWh.

The subsidy’s impact on power generation payments was underscored, with Oseni noting its adverse effects on remittances to power generation companies. This situation has led to payment challenges for generation companies, further complicating the sector’s financial dynamics.