Finally….the market system is coming. President Buhari has approved New Electricity Tariff in Nigeria. Yes, the current cost of electricity in Nigeria is hopeless for anyone to expect light. That cost has produced darkness for years. Now that the cost has improved, I am very confident that investors will come with the good greed in capitalism.
Like the new generation banks taught us, Nigerians are open to pay for better services. Yes, banks those days introduced COT (commission on turnover) and still attracted customers because it was better to lose N3k per N1,000 than waste 4 hours in a bank to collect your money. Mr. President, you need to now deal with the generator mafia and ensure we do not have more excuses in our NESI – Nigerian Electricity Supply Industry. Any sabotage should be all the way to Kirikiri! Orange is the new black…
Indeed, the new playbook is very promising: “President Buhari on Tuesday approved the increment of electricity tariff for selected consumers. The decision is in line with the proposed cost-reflective electricity tariff for the Nigerian Electricity Supply Industry (NESI).” And by adding mass metering in the equation, there could be a way out of our electricity inadequacy paralysis. But give this to the World Bank which had requested for one thing: your electricity pricing is out of phase and if you do not change it, no investor will come. The government had requested $1.5 billion for the sector, but the World Bank made it clear – either you increase tariff or you pray for that money to come, as no investor will likely come. But with this Buhari’s playbook, expect more actions in NESI.
President Muhammadu Buhari on Tuesday approved the increment of electricity tariff for selected consumers. The decision is in line with the proposed cost-reflective electricity tariff for the Nigerian Electricity Supply Industry (NESI).
Under the NESI tariff, residential areas classified as poor will not be affected by the new tariff, as it is aimed at industrial areas.
Tariff increment has been a bone of contention between electricity suppliers and consumers, with Distribution Companies (DisCos) attempting repeatedly to implement proposed upward review of billing. But the government’s intervention has restrained the planned tariff review for months now.
This is a good move by the government as I noted in the past on the need to price products well in Nigeria.
Do not think too far – the tariff for potable water in a state in South South geopolitical region in Nigeria was last reviewed in 1987. Yet, the state is looking for investors to provide potable water in the state! I saw the document and wrote to the project manager, and asked him if he could get the state to update the water rates. The response was typical – “The government cannot increase rate because it will be politically sensitive”. Of course, nothing happened, and no investor thought there was anything there.
Our leaders must find a way to engage Nigerians honestly on open conversations to move the nation forward. From electricity to potable water to healthcare services, unless there is decent revenue factor in the equation, it will be hard to move from the miry clay on the provision of basic services.
And the legal institutions need help and only the National Assembly can help them by updating the laws to avoid confusions in markets. Yes, the updates will help to engineer reflective costs that will make services become available as investors are attracted by the opportunities therein to participate. This does not mean that Nigerians should be priced out. Yet, Nigeria cannot also afford to price investors out. A win-win is needed on these services on cost.
As we examine this new tariff, consider another big one in which the central bank took over revenue collection from DISCOs and handed it over to banks. It makes real sense: if Nigeria has to take loans to help “private companies like Discos” fix themselves, Nigeria needs to play a role to see what is coming in as revenue. The Discos put themselves in this position. Yes, if they had executed well, the government would not have come with its big sticks.
Now, let there be light in Nigeria.
1. Advance your career with Tekedia Mini-MBA (Sept 13 – Dec 6, 2021): 140 global faculty, online, self-paced, $140 (or N50,000 naira). Click and register here.
2. Click to join Tekedia Capital Syndicate and own a piece of Africa’s finest startups with a minimum of $10,000 investment.