As presidential candidate, Bola Tinubu did not elaborate much on his plan for the nation’s struggling power sector. But his campaign proposal made clear he would allow electricity companies charge more for their underwhelming service.
Power distribution companies or DisCos, the manifesto of the candidate of the All Progressives Congress stated, would be enabled to charge “cost-reflective” rates. The firms would, however, not be allowed to connect new customers without meters.
“New connections will not be permitted to be energised from the Grid unless a meter has been installed,” Mr Tinubu’s official 2023 presidential election plan said.
“DisCos will be required to ensure that new connections are metered during the construction phase. We will further enable DisCos to charge cost-reflective tariffs for electricity supply.”
When the government on Wednesday asked private electricity firms to increase prices for top-tier customers by more than threefold, it would seem the administration merely kept an election pledge, even if Nigerians failed to take notice when the promise was made.
Yet, in fulfilling the plan at a time of a crippling economic crisis, the government broke another pledge: to get power companies to improve their performance before any price hike.
Last November, the Minister of Power, Adebayo Adelabu, said President Tinubu had blocked the implementation of new tariffs and wanted the government to continue to pay subsidy until power supply improved.
“The power sector is an industry that is very sensitive to any leader,” Mr Adelabu told journalists in Abuja.
“You cannot jump overnight and implement the cost reflective tariff. I can tell you that till today the government still subsidises power. Tariff should have been raised months back, but Mr President said until we are able to achieve regular and incremental power supply, we can’t touch the tariff.”
“Regular and incremental power supply” did not happen when the government pushed through its price hike Wednesday. While generation capacity rose to 5,096 megawatts in November, it did not translate to reliable power supply.
In January, the state-run Transmission Company of Nigeria (TCN) said power supply to the entire country, with a population of over 200 million, plummeted to 3,134 megawatts. For context, South Africa with 52 million people generates 50 megawatts.
As the situation barely changed with several cities facing prolonged power cuts and the national grid repeatedly failing, the minister threatened to punish distribution companies he accused of deliberately not taking up generated power from the TCN.
“Wilful non-performance by any DisCo could suffice as a reason for severe punishment or outright license revocation,” he said in March.
The Nigerian Electricity Regulatory Commission (NERC) now claims the new rates, targeted at consumers who enjoy a minimum of 20 hours of supply daily, will turn the sector around with enhanced supply and minimize grid collapse.
“The factors responsible for grid collapse, if there is no liquidity, have serious implication on the quality of supply. Generation Companies (Gencos) not being able to pay for gas supply, not being able to maintain their machines as expected or as required is a recipe for poor quality of supply and grid collapse,” the vice chairman of NERC, Musiliu Oseni, said on Arise Television on Thursday.
“So, it is part of the issues, that we believe if the market is liquid enough, definitely will be addressed.”
“Insensitive and callous”
The price hike has infuriated Nigerians, who have dismissed the assurance that only those that receive 20-hour of supply will be affected.
On Thursday, the Abuja Electricity Distribution Plc, one of the first to implement the new rate, said it mistakenly billed the wrong customers.
“This was due to a system glitch caused by the reclassification of some Band A customers who have now been downgraded to Band B due to the number of hours of electricity supply enjoyed over the past few weeks,” the firm said in a statement, promising to refund those affected.
Analysts have also questioned the rollout of such a sensitive policy.
“The way we make policy in Nigeria is bizarre. How do you just hike a tariff by 300% overnight? Couldn’t they have consulted the minority said to be getting 20 hours light a day and phased it in over time?” Joe Abah, a public policy expert and former director-general of the Bureau of Public Service Reforms, wrote on X platform.
Public anger has been more directed at the government’s “insensitivity” at a time millions are grappling with the aftermath of petrol subsidy removal and devaluation of the naira. Both measures have sent inflation to 31.7 percent, the highest in 28 years.
The government argues the policy will save N1.14 trillion in reduced subsidy payment this year, but the workers think otherwise.
The Association of Senior Civil Servants of Nigeria decried the hike as an indication that the government was prioritising revenue generation over the welfare of Nigerians who are currently struggling to survive.
“Today, we are still battling with the fuel subsidy removal without any corresponding remedy and yet the increase in the electricity tariff without even the supply of electricity,” Etim Okon, its national president, said.
“If the labour union calls for protest, government will say we are being insensitive. But without consultation, they just woke up and announced increase in price of electricity,” he added.
“No worker now can boast of anything with N30,000 minimum wage.
The Nigeria Labour Congress described the new tariff as “callous.”
“The government’s decision is not only insensitive, it is callous. It further pauperises consumers, especially workers whose wages are fixed and insufficient,” Benson Upah, the union’s head of information, said.
He said the increase makes the operating environment “more hostile for manufacturers with potential for an astronomical rise in cost of goods and services or in the worst-case scenario, more closures and loss of jobs.”
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