For decades, the power sector has remained an albatross for successive governments in the country. The problem seems to have become much worse in recent years. This is despite reforms by the present administration in the sector and the over N8trillion reportedly invested in it from 1999-2024 to revamp the ailing sector. Of this amount, N5trillion was spent between 1999 and 2013, but only 2, 500 MW was generated. In spite of the huge investment, Nigerians are still groaning over poor power supply, and high electricity bills. Consumers without electricity meters also grapple with estimated billings.
Following the hike in electricity tariffs, many electricity consumers have complained bitterly that their electricity bills are now higher than their house rents. Coupled with high cost of petrol and diesel, it has been tough times for business owners as well as Small and Medium Enterprises (SMEs) that provide over 86 million jobs. With high cost of power, it is becoming extremely difficult for these companies to be in business. Some have shut down operations. Many have relocated to other countries in West Africa. This has inexorably led to reduction of workers and rise in prices of goods and services. Even those on prepaid meters also complain about unexplained deductions. Some have been compelled to go off grid, and others have resorted to invest in solar inverters as alternative sources of power supply.
No doubt, exorbitant electricity bills have negatively impacted both households and businesses in the country. Most of them are struggling with increased operational costs, resulting in low profit margins, and business closures, leading to economic strain and decreased productivity. For an average household, it means less money available for food, clothing, medicines and education.
Consequently, many families are now forced to cut back on non-essential items or reduce energy consumption. Across the states, some of which have not had power supply for months, like the North-East region, electricity consumers cry out that the burden of high tariff has pushed them further down the poverty line and deep financial straits. For manufacturing companies, high electricity tariffs have increased the cost of operation, making it harder for them to compete favourably with their counterparts in other countries. Besides hampering industrial development, exorbitant electricity bills have reduced the attractiveness of Nigeria as a preferred destination for investment.
According to data from the World Trade Organisation (WTO), Nigeria is currently ranked 97th in the latest Global Competitive Industrial Performance Index, 34 places below South Africa, partly as a result of crisis in Nigeria’s power sector value chain and poor ease of doing business. The Manufacturers Association of Nigeria (MAN) says that over 700 industries have closed down, with resultant job losses due to high operational costs and alternative energy spending that has taken a big chunk of their budgets.
It is sad that the power sector has become a paradox of sorts. While consumers are buffeted with outrageous bills, the government seems to be the beneficiary. Its policy of gas pricing and tariff structures have resulted in increased costs for consumers even as the beleaguered sector remains financially unsustainable due to unmet government obligations. The Minister of Power, Adebayo Adedibu, recently said that the sector has accumulated huge debt exceeding N3trillion. The frequent national grid collapse has equally hindered reliable power supply, just as lax regulations, corruption and inefficiencies of the Discos have worsened an already bad situation of the sector.
Considering the significant role of the power sector in the economy, we call for the urgent intervention of the government. The federal government should come up with workable measures to address the power sector challenges and improve power supply across the country. Also, there is need to explore other options for reducing electricity tariff, potentially through increased government subsidies, renewable energy solutions, investing in infrastructure upgrade and diversifying energy sources that will improve the power in the country.
Apart from addressing exorbitant electricity bills, the government should improve energy efficiency at household level. Manufacturers and small business owners should be given adequate electricity for their efficient operations. Let people use energy-efficient appliances and devices in order to save energy. Above all, the power sector needs total overhaul. The era of poor energy supply and high tariff is no longer acceptable.a