In the last three decades, thousands of views, facts, and figures have been stated about the nature of electricity in Nigeria. From citizens to professionals and think-tanks, the discourse has been ‘finding lasting solutions’ to the perennial problem when it is clear that government cannot sustain the public ownership model. However, despite the privatization of the public electricity authority, the promise of improved service delivery remains largely unfulfilled. Now that the government has increased electricity tariffs, particularly for customers on Band A, questions arise regarding the justification for such hikes amidst ongoing deficiencies in service provision.
From the digital platforms to the mainstream media and on the streets across the country, the decision has sparked a wave of apprehension and discontent beyond the targeted customers. Our analysis of the views expressed about the announcement of the increase reveals narratives characterized by inefficiency, mismanagement, and a lack of accountability on the part of the electricity operators as well as the regulatory agencies. On the other hand, analysis also establishes potential direct impacts on the targeted customers and indirect consequences on the citizens in general.
The Culture of Fear
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Our analyst notes that the two sides of the narratives stem from a growing sense of frustration with the government’s inability to resolve the core problems ailing the electricity industry. It also represents a larger trend of mistrust and cynicism toward the actions and policies of the government. The rise means that instead of the previous average of N50,000 per month, Band A customers—who make up 15% of the 12 million energy users—will probably spend N170,000 on electricity each month.
Since the majority of Band A customers are commercial users and those who enjoy 20-hour electricity supply per day, manufacturers and labour unions have expressed their dismay over the increase. They insisted on the electricity subsidy, warning that its removal would send manufacturers out of business and worsen inflation. The National Labour Congress described the hike as “insensitive and callous” and see the move as further discriminatory, affecting consumers, particularly workers, and making the manufacturing environment more hostile. The Trade Union Congress, on the other hand, argued that the government’s focus on revenue generation was detrimental to citizens’ survival.
The unions and other stakeholders are also of the view that companies that cannot cope with the current economic climate may face losses. They may need to scale down operations, potentially involving firing employees or increasing prices for products with high demand. However, according to the stakeholders, the primary concern is that many companies will record more losses or reduced profits. Many companies are also transitioning to part-time, offsite, and temporary employment, leading to the loss of full-time jobs and part-time jobs. Small businesses are already experiencing high rates of running, leading to higher costs and increased commodity prices.
Addressing the Concerns
The grievances expressed by consumers regarding the tariff increase are undeniably valid. It is unconscionable to burden citizens with higher tariffs when the underlying issues of poor service delivery remain unaddressed. Therefore, it is incumbent upon the government and relevant stakeholders to provide transparent explanations for the tariff hikes and outline concrete steps towards improving electricity supply.
The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture is advocating for a transparent and gradual approach to policy implementation to align energy costs with market realities, despite the need for consideration of the broader economic impact on industries. The body also notes that the existing system is not generating the desired liquidity to match the escalating costs, and millions of electricity consumers are yet to be metered due to the exploitative practice of estimated billing.
Our analyst notes that central to rebuilding trust and confidence in the power sector is a commitment to transparency and accountability. The government must provide clear and comprehensive justifications for the tariff increase, including detailed breakdowns of how the additional revenue will be utilized to enhance service delivery. Moreover, there must be mechanisms in place to hold electricity companies accountable for their performance and ensure that they fulfill their obligations to consumers.
Improving electricity supply in Nigeria requires significant investments in infrastructure and technology. This includes upgrading existing power plants, expanding the grid network, and deploying innovative solutions such as renewable energy sources and smart grid technologies. Such investments are essential not only for addressing current deficiencies but also for building a resilient and sustainable power sector for the future.
Giving consumers access to information and resources is critical for cultivating an accountability and transparency culture. This includes offering channels for comments and complaints, as well as educating customers about their rights and duties around electricity consumption. By actively engaging with customers, the electricity industry can establish trust and confidence, laying the groundwork for significant reform and development.
The decision to increase electricity tariffs in Nigeria amidst ongoing challenges with service delivery has understandably generated widespread concern and skepticism. However, it provides an opportunity for contemplation and action. By tackling the core causes of poor energy supply, prioritizing openness and accountability, and investing in infrastructure and technology, Nigeria may begin to break free from the cycle of fear and uncertainty that has long plagued its power industry. Only through concerted effort and collaboration will we be able to achieve our objective of a stable and accessible energy supply for all Nigerians.