The deregulation of the downstream arm of the oil and gas sector and the power sector has generated discussion among Nigerians. Assistant Editor CHIKODI OKEREOCHA examines the case for and against this action
Chief Toyin Amuzu, a community leader in Ogun State, is livid. He could hardly hold back his anger and frustration over the barrage of increases in the price of essential services including Premium Motor Spirit (PMS), electricity tariff, as well as the upward adjustment in Value Added Tax (VAT), and subscription price by pay-TV operators, among others.
“It is disheartening that this is coming during the COVID-19 pandemic which has disrupted economic activities and taken many people out of jobs with other attendant negative effects,” Amuzu, who is the Okanlomo of Oke-Ijeun, charged.
He lamenting that “The increases will result in an upsurge in costs of goods and services, which in turn, would worsen the biting hardship presently faced by Nigerians who are already impoverished and overburdened.”
Chief Amuzu, who spoke in Abeokuta, the Ogun State capital, said he had earlier called on government at all levels to give succour to Nigerians who are still rattled by the COVID-19 pandemic. He called on the Federal Government to lift the heavy burden on Nigerians by reversing the hikes immediately.
The distraught community leader justified his call for a reversal thus: “The price increases, no doubt, would work against the fight against corruption and insecurity, as there can be no secured society where many people are so poor, finding it difficult to make ends meet.”
But it is doubtful if the call for a reversal by Amuzu and indeed, other Nigerians traumatized by the rising cost of living and its associated hardship and misery will hit the right chord in the ears of the authorities. This is because such upward adjustments in prices appear to have come to stay, going by some of the reasons adduced for the action.
The removal of subsidy, inflation, currency devaluation, rising operational costs and other prevailing economic realities, for instance, service providers across critical sectors such as power, oil and gas, and entertainment, among others, literarily hit the raw nerves of Nigerians when they increased their prices.
In what would go down as perhaps, a season of price increases, Nigerians, still reeling from the double shocks of the Covid-19 pandemic and the plunge in oil prices, woke up to a new tariff regime in the power sector last Tuesday.
Without much ado, the Electricity Distribution Companies (DisCos) jacked up the electricity tariff payable by consumers from the original N22.30 per KWH to between N42.73 per KWH and N55.20 per KWH.
However, the tariff payable by consumers now depends on service availability in homes and offices, the quantity of supply, and the band or group into which a consumer is categorized. These, of course, vary from DisCo to DisCo.
Nigerians were yet to come to terms with the reality of paying more for electricity amid outcry over the declining quality of services when, the following day, Wednesday, September 2, 2020, the Petroleum Products Marketing Company (PPMS) also announced N151.56 as the new ex-deport price of PMS.
PPMC is a subsidiary of the Nigerian Petroleum Corporation (NNPC). And going by its current template, the price of PMS has gone up from its original N148 per litre to N151.56. However, some filling stations now dispense the product at between N162 and N164 per litre.
Even before service providers in the oil & gas and power sectors went for the kill, their counterparts in the Pay-TV segment of the entertainment industry had gone on the rampage, reviewing the prices of their products and services upward.
For instance, largest Pay-TV operator MultiChoice Nigeria announced the implementation of subscription price adjustments by 13 per cent on some of its Digital Satellite TV (DStv) and GOtv packages on August 18, 2020. It came into effect on September 1, 2020.
Consequently, the subscription price for its monthly premium package went up from N16, 200 to N18, 400, which is N2, 200 increase. Compact plus subscribers will now pay N12, 400, up from N10, 925, while compact bouquet subscribers will pay N7, 900, from N6, 975.
The South African-owned operator, however, said the adjustments only affect the Premium, Compact Plus and Compact packages, as lower-priced packages such as Confam, Yanga and Padi retained their normal prices.
Multichoice explained that the increase in fees was in line with the Federal Government’s legislation which increased VAT in January 2020, with implementation effective on February 1, 2020.
“To provide some relief for customers, Multichoice Nigeria has absorbed the cost of an increase in VAT for the past four months, keeping its products and services at the old five per cent VAT. However, this is no longer possible and the mandated 7.5 per cent VAT will be applied accordingly,” the company said.
Second largest Pay-TV operator StarTimes also raised prices of its subscription plans by an average of 22 per cent effective August 1, 2020, with its Brand and Marketing Manager, Viki Liu, also citing increased VAT as well as the foreign exchange rate which has impacted its cost of operation as reasons for the price increase.
“Our business is not exempted from the effect of the naira depreciation affecting all businesses in the country. All of our foreign content is bought in dollars and to continually serve our subscribers the best content, the subscription price has to be reviewed upwards,” Liu explained.
