Once Again, Nigerian Government Subsidizes Electricity

Once Again, Nigerian Government Subsidizes Electricity

On September 28, the Federal Government of Nigeria averted proposed nationwide strike by Organized Labour, over the increment of petrol pump price and electricity tariff, by promising to, within two weeks, implement effective measures that will cushion the effects of the price hike.

As part of the agreement, the Federal Government was given two weeks by a committee made up of stakeholders and representatives from both the government and Organized Labour, to set the ball rolling.

On Monday, the Federal Government announced that, as part of its efforts to implement measures that will ease the strains of the price hike, it will work out modalities to ensure that customers overcharged by the eleven electricity Distribution Companies (DisCos), as a result of the electricity tariff hike will be fully refunded.

Earlier in September, the Nigerian Electricity Regulatory Commission (NERC), increased electricity tariff from N30.23 per kilowatt-hour to N62.33 per kwh. As a result of the tariff increment, five distinctive bands (A-E) were created to reflect the various service levels and minimum hours of power supply.

Customers were to be allotted electricity supply according to the hours of electricity they consume in their respective Bands. Customers in [Band A] are to enjoy a daily minimum supply of 20 hours, those in [Band B] minimum of 16 hours, [Band C] will have minimum of 12 hours, [Band E] minimum of 8 hours, and those in [Band D], a minimum of 4 hours daily electricity supply.

According to NERC, the increased tariff will only apply to customers in Bands A, B and C, while D and E remain frozen until they are allotted more hours.

And as part of efforts to improve service delivery in the power sector, the Special Adviser to the president on Infrastructure, Ahmed Rufai Zakaria, said about six million Nigerian households will be metered. He added that the tariff relief plan will be implemented this week to uphold the agreement between Organized Labour and the Federal Government.

“The implementation of the above tariff reliefs will be executed within this week as the suspension of the Service-Based Tariff is removed; the distribution of six million free meters to Nigerians and refunds for any customer overcharged by the DisCos will be implemented.

“We completed our work with Labour on electricity tariffs. The federal government will use Value Added Tax, VAT proceeds from the Nigerian Electricity Supply Industry (NESI), to reduce the September increases by 10 percent to 31 percent for bands A to C, Band D and will remain frozen,” he said.

However, the tariff subsidy is expected to last for three months, which leaves gaps in the agreement between Labour and the Federal Government, and some unanswered questions.

The agreement entails that the Federal government, among other things, will roll out measures, including tax waiver on the minimum wage and intervention fund to reduce the burden of the petroleum pump price and electricity tariff hike.

“A specific amount is to be unveiled by the Federal Government in two weeks’ time, which will be isolated from the Economic Sustainability Programme Intervention Fund that can be accessed by Nigerian Workers with subsequent provision for 240,000 under the auspices of NLC and TUC,” said the Minister of Labour and Employment.

While the move offers reprieve to Nigerians on electricity, fuel price hike remains unaddressed as it involves multifaceted mechanisms that the government is struggling to develop.

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