The Organised Private Sector of Nigeria (OPSN) has set conditions to back the electricity tariff hike.
It agreed with the Federal Government that the subsidy regime had become unsustainable and should be discontinued forthwith.
The conditions were contained in the agreements reached on September 4 after the OPSN leadership met with the Federal Government through Special Adviser to the President on Infrastructure Ahmad Rufai Zakari.
The recent increase in electricity tariff, which took effect on September 1, was the kernel of discussion at the OPSN parley with the government.
According to the body, the consequences will be inimical to the power sector if subsidy is allowed to continue.
The OPSN said: “The electricity industry will collapse, as the government no longer has the fiscal capacity to sustain the increasing subsidy level and at the same time finance the capital investment necessary to extend electricity supply to the over 90 million Nigerians who lack access to electricity.”
It, however, spoke of the importance of creating conditions attractive to private investment in the Nigerian Electricity Supply Industry (NESI) for which cost reflective tariff is inevitable.
It said: “It is, however, imperative that the confidence of electricity consumers must be inspired and they must be assured that the new tariff regime will lead to significant and sustained improvement in the quantity and quality of electricity supply.
“The new tariff structure must be transparent, charges must be fair and consumers must be able to verify that they are paying only for what they consume.”
The OPSN comprises the Nigerian Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA), Manufacturers Association of Nigeria (MAN), Nigeria Employers’ Consultative Association (NECA), Nigerian Association of Small and Medium Scale Enterprises (NASME), and Nigerian Association of Small Scale Industrialists (NASSI).
At the meeting, the OPSN called on the Federal Government to justify the necessity for the tariff increase at a time the economy was facing a potentially deep recession.
It also questioned the rationale behind the policy at a time Nigerians face increasing hardships, with unemployment rising to over 27 per cent and many factories risk total closure.
But the special adviser explained to the OPSN representatives the serious financial quagmire in which the government had found itself, a situation he said, made it impossible for it to continue to sink hundreds of billions of naira into the NESI without any positive improvement in the supply of electricity to consumers.
According to him, over the past five years, subsidy on electricity has skyrocketed from N165 billion in 2015 to over ¦ 500 billion in 2019, superseding the budgetary allocations to health and education combined.
These figures were also confirmed from the recent Senate Committee on Power’s investigative hearing in June, 2020.
However, after extensive, frank and open discussions, the meeting agreed that the subsidy regime has simply become unsustainable and should be discontinued to avoid the collapsed of the electricity industry.
A statement by the group, urged the government to compel electricity Distribution Companies (DisCoS) to massively invest in a metering programme that will totally eliminate estimated billing which they (DisCoS) routinely resort to, to extort money from consumers to boost their revenue and make up for their chronic inefficiencies.
It said: “The metering programme through the Central Bank of Nigeria (CBN) to fund locally made meter manufacturing bulk purchase should be accelerated; measures that should ease the burden of industrial consumers must be implemented even if as temporary arrangements.
“This is to enable them to sustain operations and remain competitive without resorting to laying off employees. Such measures as the Eligible Customer Scheme, which has been approved by the Nigerian Electricity Regulatory Commission (NERC) but has been blocked by
“DisCos must be allowed to come into play without any further delay.
“In the interest of Nigerian workers who are facing retrenchment under the prevailing high cost operating environment, the government must explore all avenues for supporting industries to remain viable.
“Such measures should include but not limited to prevailing on the CBN to review its recent decision on payments of imports; reviewing the current policy on border closure; helping to resolve the current dispute between MAN and DisCos.”
The group said the dispute had resulted in a never-ending litigation holding back the utilisation of over 5000MW of stranded electricity which is not deliverable to consumers.
It also urged the government to prevail on the NERC to be more firm and fair in dealing with stakeholders in the electricity supply market.
It said: “The OPSN agreed to further engage with the NERC to discuss issues and concerns and formally present recommendations in relation to the power tariff. This should include high quality service focused on industrial clusters and business hubs.
“It was further agreed that the OPSN would continue to engage the government through the Presidency, Ministry of Power, NERC and other key agencies to continue deliberations and provide feedback on the monitoring of the implementation of the Service Based Tariff structure.”