Electricity Featured

70bn Self-Generated Electricity: Organised Private Sector, Labour Call For MYTO Revisal

Worried over the prevailing harsh operating environment, the increasing burden of taxes and the enormous spending on self-generated electricity up to the tune of N70billion, the Organised Private sector, under the aegis of Manufacturers Association of Nigeria (MAN), Lagos Chamber of Commerce and Industry (LCCI), the Nigeria Employers’ Consultative Association (NECA); the organised labour, under the aegis of the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC), have called for the immediate revisal of the Multi Year Tariff Order (MYTO) for January to June 2021 signed by Engr. Sanusi Garba, the Chairman of National Electricity Regulatory Commission (NERC), on December 30, 2020, with the adjustment of N2.00 to N4.00 per kilowatt per hour of electricity, effective January 1, 2021.

The Federal Government at the weekend directed the National Electricity Regulatory Commission (NERC) to forestall the implementation of the duly performed minor review from N2 per kWh to N4 per kWh till the conclusion of the Joint Ad Hoc Committee’s work at the end of January 2021.

Engr. Sale Mamman, Minister of Power, who made the disclosure via his Twitter handle, said: Electricity tariffs will now revert to what it was in November 2020, following the agreement between Labour and the Federal Government to increase the tariff (but still retain some subsidy), until the conclusion of the committee set up to look into tariff issues.

“Your electricity bill for the month of January will be based on the tariff you used when you paid your bill in December (if you are a postpaid user or estimated billing) and November and December if you are a prepaid electricity user.

He tweeted: “To promote a constructive conclusion of the dialogue with the Labour Centers (through the Joint Ad-Hoc Committee), I have directed NERC to forestall the implementation of the duly performed minor review (which adjusted tariffs between N2 per kWh and N4 per kWh) until the conclusion of the Joint Ad Hoc Committee’s work at the end of January 2021.

Comrade Ayuba Wabba, President of the NLC, in an interview with DAILY INDEPENDENT concerning the increase, said the chief casualty of the tariff increase by NERC is the public trust and confidence in government.

According to Waba, the events of the past three months have severely tested the confidence of Labour in the ability of government to negotiate in good faith and keep to its promises.

“We wish to set the records straight that the decision taken by government since our negotiation in September 2020 in tinkering with the electricity tariff is anomalous with the spirit and letters of our agreement.

“The understanding we had with government was to suspend further increases in electricity tariff until the committee set up by government and labour are able to iron out the incongruities in Nigeria’s electricity sector.

Contrary to what the Honourable Minister projects to the public, the truth is that while the committee was yet to conclude its assignment, government unilaterally hiked electricity tariff. This is most unfortunate and totally unacceptable.

“In the new tariff structure as has been advertised by many of the DISCOs, the price adjustment was not minor as some of the increases were up to 60% to 100% across all the bands.”

Segun Ajayi-Kadir, the Director General of the Manufacturers Association of Nigeria (MAN), in conversation with DAILY INDEPENDENT, on the tariff increase, said the expectation of operators in the manufacturing sector is that Government will continue to provide stimulus packages that will aid the recovery of the sector and avert the shutdown of factories nationwide with multiplier effect on the employment of about 5 million workers.

He said: “We expect that NERC as the regulator will ensure improved electricity generation, transmission and distribution that will lead to adequate and reliable electricity supply in the country rather than squeezing the mere 4000MW to meet all revenue needs of key sharing stakeholders.

“We equally expect NERC to make regulations that will ensure that 80% of consumers are metered to ensure consumption reflective payment; aid inflow of investment in the energy industry in order to increase generation capacities and usher in large scale production of electricity. The recent absurd increase does not support these desirable propositions”.

According to Ajayi-Kadir, the recent increase in electricity tariff is not manufacturing friendly and ill-timed because it will exacerbate the already high manufacturing cost environment, worsen competitiveness, further depress productivity in the sector and May exclude Nigeria from the list of beneficiaries of AfCFTA.

Dr. Muda Yusuf, the Director General of the Lagos Chamber of Commerce and Industry (LCCI), in telephone conversation with DAILY INDEPENDENT called on the Federal Government and electricity distribution companies (DisCos) to adopt a strategic approach to the nation’s electricity pricing, so as to facilitate a smooth transition to new electricity pricing regime.

Dr Yusuf emphasised that the government should ensure there is a smooth transitioning to the new pricing regime, in order to minimise shocks and risk of pushback from the consumers.

The LCCI Director General explained further that the commercial arguments for a hike might be strong, as there was need for the importance of reckoning with the economic, social and political ramifications of such price reviews.

He noted that the Government needs to be strategic and gradual while implementing the transition framework to the new pricing regime.

He advised that to facilitate a smooth transition, the contexts of the transition should have a moderate effect on price movement at this time, as electricity is a product of high social significance.

He said: “Context matters in policy conceptualisation and implementation, and we need to worry about social and economic contexts. These contexts should have a moderating effect on price movement at this time, especially for a product of high social significance. It is important to take these factors into account in order not to put the entire reform process at risk.”

Dr. Timothy Olawale, the Director General of the Nigeria Employers’ Consultative Association (NECA), in an interview with our correspondent said the Government needs to be strategic while implementing the transition framework to the new pricing regime, adding that the,” manufacturing sector was faced with several structural challenges, with adverse impact on growth performance”.

He specifically said: “The sector has been struggling with growth in recent years due to tough operating conditions in the local business environment and has made most industry players less competitive in the domestic and regional markets.

According to Olawale, in October 2020, after series of backlash at the back of the increase in electricity tariff, the Federal Government and the organized Labour agreed to pro.

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