FG Clarifies: No 65% Electricity Tariff Increase, Planned Price increase

The Federal Government of Nigeria has clarified that there will not be a 65% increase in electricity tariffs as rumoured, but rather, a price adjustment is expected soon. This announcement comes amidst significant pushback from organized labor, including the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC), who have opposed any form of tariff hike.

The government, through the Minister of Power, has noted that the current electricity subsidy, which places a heavy financial burden on the national treasury, is unsustainable. This was underscored during a Senate session where it was revealed that without tariff adjustments, Nigeria could face a blackout within three months due to a lack of funds to keep power infrastructure running.

The forthcoming price adjustment will mainly affect Band A consumers, representing about 15% of the 12.82 million electricity consumers in Nigeria. These consumers, who are supposed to receive up to 20 hours of electricity daily, will see their tariffs increase from N68 per kilowatt-hour to N225 per kilowatt-hour, an increase of 240%. This was made public by the Nigerian Electricity Regulatory Commission (NERC) during a press briefing in Abuja on April 3, 2024.

Response to the adjustment

The NLC and TUC have issued strong warnings against the tariff increase, describing it as both insensitive and illegal given the deregulated status of the sector. They’ve organized protests and have threatened further industrial actions if the government does not reverse its decision.

There’s been considerable public outcry, with many arguing that increasing tariffs in the current economic climate is illogical. Critics, including Emmanuel Onwubiko from the Human Rights Writers Association, have called the hike unreasonable, especially with rising inflation and widespread poverty.

Despite the backlash, the government insists on proceeding with the price adjustment, arguing it’s essential for the sector’s financial health. The Minister of Power has reiterated during Senate hearings that the subsidy removal is crucial for preventing a collapse in electricity supply.

NERC has taken steps to enforce the new tariff classifications, notably fining Abuja Electricity Distribution Plc ₦200 million for incorrectly billing all customer bands under the new tariff structure.

Both the House of Representatives and the Senate have expressed concerns over the tariff adjustments, with calls for suspension from various quarters, including labor unions and the Nigerian Bar Association. The Senate explicitly rejected the proposed tariff regime, warning of potential widespread power outages if not re-evaluated.

While the Federal Government refutes the notion of a 65% tariff increase, it confirms the necessity of a price adjustment for the sustainability of the power sector. However, this move has sparked a significant confrontation with labor unions and public stakeholders, potentially affecting electricity supply, economic activities, and public sentiment in Nigeria.

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