Afenifere, Lagos, and Abuja Chambers of Commerce Warns About the Rising Electricity Tariffs

Afenifere, a pan-Yoruba sociopolitical and cultural organization, and the Organised Private Sector (OPS), which includes the Lagos Chamber of Commerce and Industry (LCCI) and the Abuja Chamber of Commerce of Industry (ACCI), have expressed deep concern about the Nigerian Electricity Regulatory Commission’s (NERC) recent increases in electricity tariffs for Band ‘A’ customers.

Senator Ali Ndume, who represents Borno South in the National Assembly, has also opposed the increase in electricity tariffs, calling the time inappropriate.
This comes as NERC urged power distribution providers yesterday to repay all overbilled Band ‘B’ customers by April 11.

In their separate replies to the apex regulator of Nigeria’s electricity sector’s tariff increases, the groups stated that the decision will worsen Nigerians’ living standards while also increasing the cost of doing business in the country.

The LCCI expressed its opinion in a statement titled “The Rising Cost of Doing Business in Nigeria,” arguing that the increase in electricity tariffs and the Central Bank of Nigeria’s (CBN) decision to raise the Monetary Policy Rate (MPR) from 22.75 percent to 24.75 percent would make the costs of living and doing business in Nigeria unbearable.

The statement, signed by LCCI’s Director General, Dr. Chinyere Almona, stated that the two decisions were exacerbated by the difficulty of importing and clearing goods in the country’s ports.

“Feedback from businesses and analysts suggests that these moves will inflict severe pain on the private sector, further exacerbating the already challenging economic environment,” she said.

According to Almona, “The recent hikes in the MPR have directly translated into higher interest rates, making it more expensive for businesses to access credit for working capital, expansion, and sustainability.
“We have consistently advised that rate hikes alone will not curb inflation without resolving the challenges of the real sector of the economy. The real sector has demonstrated the capacity to create more jobs, manufacture products for consumption and export, and sustain the industrial base of the economy.
“While we understand that high-interest rates attract Foreign Portfolio Investments (FPIs) and local investors to treasury bills and bonds, we lament the drying up of funds away from the private sector to government treasuries.”

The chamber accepted that the removal of the electricity supply subsidy was intended to entice international investors into the sector by offering a cost-reflective price.
However, it also stated that it had argued for subsidizing production rather than consumption.However, our main issue is that firms pay a high price for services that they do not use properly. It is deeply concerning that, despite rising energy costs, businesses continue to be unable to utilize this service.

“We call for an aggressive metering programme that leads to 100 per cent coverage of electricity consumers.
“This guarantees liquidity for the distribution companies and gives more satisfaction to consumers with a feeling of paying for what they consume,” she said.
“We are concerned that businesses will face double jeopardy in paying a higher electricity tariff and another cost in providing a private electricity supply,” she added.

In a separate reaction, ACCI has expressed concern that the recent hike in electricity costs may have a negative impact on the ease of doing business in Nigeria.
Mr. Emeka Obegolu, President of ACCI, stated in Abuja yesterday that the raise will have a substantial impact on businesses across all sectors of the economy.
Obegolu voiced concern that the tariff increase will have a significant impact on small and medium-sized enterprises (SMEs), which are critical to the country’s economy.
“The ease of doing business is an important component in promoting economic growth, attracting investments, and creating jobs.

“Regrettably, the increase in electricity tariffs can hinder these efforts by imposing additional financial burdens on businesses, especially SMEs, which are the backbone of our economy,” he said.

Afenifere has accused the Ministry of Power and NERC of making Nigerians pay for their inefficiencies.
According to a statement issued yesterday by Afenifere’s National Publicity Secretary, Jare Ajayi, the 300 percent hike in electricity tariffs will hinder President Bola Tinubu’s administration’s efforts to improve the economy by causing businesses to downsize.
The group questioned how businesses could thrive as envisioned by President Tinubu when the price per kilowatt hour (kWh) of energy increased from N68 to N225 within 24 hours of its introduction.

It added: “If the relevant government agencies are to be sincere with Nigerians, what they should do is to first ensure regular and efficient supply of electricity before acceding to increase in payment for services that are being poorly rendered.
“A rough calculation indicated that a person on Band A who was paying an average of N50,000 per month (on N68 per kWh) would now have to pay N170,000 for the same service. Note the increase!
“It is noteworthy that the ministry and its agency, the NERC, are interested in the revenue that would be generated rather than first ensuring regular and efficient supply. This is in contradiction to the claim that the government agencies care about the pains of Nigerians,” Afenifere added.

Ndume insists that the timing of the tariff hike is incorrect.

Ndume, who also criticized the increased tariff, claimed that Nigerians had yet to recoup from the loss of fuel subsidies.

In a statement issued yesterday, the former Senate leader urged the federal government to reconsider its position in the interest of Nigerians, noting that Nigerians were already suffering numerous issues such as unprecedented inflation, low purchasing power, insecurity, and other hardships.
According to Ndume, the federal government should prioritize delivering steady energy to Nigerians, lowering inflation, stabilizing the naira, lowering food prices, and providing other essential services to Nigerians before raising tariffs.

Ndume said: “The news of the increment came to me and many of my colleagues as a shock. It also came at a time when the National Assembly was on a break. I think the timing of this hike is very wrong. Nigerians are grappling with many challenges.”
However, despite the complaints, NERC yesterday insisted that the electricity tariff for Band ‘A’ customers, Nigeria, remains the 4th cheapest among 18 countries surveyed in Africa.
In a Frequently Asked Questions (FAQ) released by the organisation, it stressed that despite the perceived high prices of on-grid electricity, it remains the cheapest and most reliable compared to other alternatives.

NERC Directs Discos to Refund Overbilled Consumers Within Four Days

Meanwhile, NERC yesterday directed the power distribution companies to refund all overbilled Band ‘B’ customers by April 11.
This directive followed complaints from customers, who are not on Band ‘A’ but reported that they were being made to pay N225/KWh for electricity.
The federal government had last Wednesday said they would no longer pay subsidies on electricity consumed by Band ‘A’ customers.
It, however, directed that other customers would continue to pay the old rates.
But as the Discos upgraded their payment platforms, some customers on Bands B, C, D, and E said they were made to pay N225/KWh instead of the old tariffs.
Following these complaints, NERC has directed all distribution companies to refund the affected customers.

The NERC issued a further order stating that “all DisCos shall ensure that only the newly approved Band A feeders listed in their April 2024 supplementary orders are maintained as Band A for the purpose of vending to prepaid customers and billing for postpaid customers on their networks” .
DisCos must post approved Band A feeder schedules affected by rate reviews on their websites immediately. All DisCos must provide a gateway on their website by April 10, 2024, that allows all customers to verify their current bands by entering their meter or account numbers.

“All customers wrongly billed at the new rate should be refunded through energy tokens not later than Thursday, April 11, 2024, and file evidence of compliance with the commission by April 12, 2024,” the NERC added.