Suspend proposed electricity tariff increase, OPS tells NERC

Organised Private Sector (OPS) has called on the Nigerian Electricity Regulatory Commission (NERC) to suspend the proposed increase in electricity tariff, stressing that the move is not business-friendly at this period of COVID-19 which has caused a massive halt to business and economic activities.

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The organised sector, however, noted that instead, the tariff should be reduced so that the real sector, small and medium companies can have less impact on the economic halt.

“Any increase in tariff will reinforce the already high cost of doing business for the Private Sector and further depress productivity in the manufacturing sector. 

“Government is a major stakeholder in the electricity industry should concentrate on developing processes and policies to attract significant investment to encourage scale generation with improved transmission and distribution infrastructure in the industry. Evolution of a more realistic tariff structure that will support the growth of the sector is very critical at the moment.”

“Government should review the privatisation/unbundling of the electricity industry in the best interest of the over two hundred million of Nigerians. 

The statement further read that, “the OPSN is not in support of any minor, major and extra-ordinary tariff review or the proposed upward review in electricity in an economy that just came out of recession and currently experiencing fragile growth such extra-ordinary upward review will be counterproductive on consumption and productivity.”

“Any form of an increase in electricity in the face of inadequate electricity supply, high electricity tariff and the exorbitant cost of self-generated electricity up to the tune of N119billion (excluding billions of Naira spent on settling monthly electricity bills) is not business-friendly as it will further spike the cost of doing business with consequential upward spiral effects on the unemployment rate.”

“Conventionally, the impact will be more felt by businesses, who by default is in the Heavy Users’category ‘D’where electricity tariff is the highest.”

OPS advised that government, being a major stakeholder in the electricity industry should concentrate on developing processes and policies to attract significant investment to encourage scale generation with improved transmission and distribution infrastructure in the industry.

“Evolution of a more realistic tariff structure that will support the growth of the sector is very critical at the moment.

“Government should review the privatisation/unbundling of the electricity industry in the best interest of the over 200 million Nigerians.”

OPS appreciated the efforts of the NERC to ensure and sustain improvement in electricity supply and seamless operations of the Nigerian Electricity Supply Industry (NESI) for the benefit of the country as a whole and private businesses.

According to the sector are reflected in a number of regulatory interventions to ensure that stakeholders operate in line with the set guidelines.

The sector noted that improvement in electricity supply in terms of tariff, quantity, quality, reliability and efficiency in service delivery is critical to the growth and development of private sector businesses, especially manufacturing.

“This is the major reason why the OPSN has followed with keen interest, all recent developments relating to issues of electricity supply, particularly the desire to put in place a cost-effective electricity tariff in the industry.”

Noting that private business operators in Nigeria, especially the manufacturing sector is already plagued by high-cost operating environment arising from a poor regulatory environment, macroeconomic asymmetries and high cost of energy, the sector specifically pointed out that the unfriendly operating environment is responsible for the oscillatory performance of the sector in the past few years.

He noted, “capacity utilization will further diminish; contribution to GDP will decline; employment in the sector will drop; foreign exchange earnings from the sector (as high-cost production feeds into export commodity prices) will dip.

“The OPSN is also concerned by the impact of the tariff increase on the macroeconomic such as: on Gross National Product (GNP); Gross Domestic Product (GDP), disposable income, consumption, consumer price index, employment, government revenue from corporate taxation etc. Long-term impact on the efficiency of the production of goods and services and standard of living; and Uneven development in certain parts of Nigeria as the percentage increase in tariff differs across DISCOs to mention but a few.”