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By Merit Ibe
Considering the Federal Government stance that it no longer has fiscal capacity to sustain the increasing subsidy level on electricity and at the same time finance capital investment, the OPSN has hinted that it was necessary for government to explore avenues to support industries to remain viable.
In the interest of the increasing number of Nigerian workers who are facing retrenchment under the prevailing high cost operating environment, the private sector enjoined government to explore these measures, which 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 the Manufacturers Association of Nigeria (MAN) and the distribution companies, which has resulted in a never-ending litigation holding back the utilisation of over 5000mw of stranded electricity, which is not deliverable to consumers.
“Government must prevail on NERC to be more firm and fair in dealing with stakeholders in the electricity supply market.”
The private sector made its position known when it met with the Muhammadu Buhari administration through the Special Adviser to the president on Infrastructure for discussion on the recent increase in electricity tariff.
The OPSN, comprising the Manufacturers Association of Nigeria (MAN), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Nigeria Employers’ Consultative Association (NECA), Nigerian Association of Small and Medium Enterprises (NASME) and Nigerian Association of Small Scale Industrialists (NASSI),
had called on Buhari to justify the necessity for the increase in the tariff, at a time when the economy was facing a potentially deep recession and Nigerians were facing hardship, with unemployment rising to over 27 per cent.
Responding to the private sector, the special adviser informed the meeting of the serious financial quagmire in which the government has found itself, which has made it impossible for it to continue to sink hundreds of billions of naira into the electricity industry, without any positive improvement in the supply of electricity to consumers.
He informed the OPSN heads that over the past five years, subsidy on electricity has skyrocketed from N165billion in 2015 to over N500billion in 2019, superseding the Federal Government’s budgetary allocations to health and education combined. “These figures were also confirmed from the recent Senate Committee on Power Investigative hearing in June 2020.”
After extensive discussion, the meeting agreed that the subsidy situation if allowed to continue, the electricity industry will collapse as 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.
OPSN noted that it was therefore necessary to create conditions that will attract private investment in the industry for which cost reflective tariff is inevitable.
The private added that it was however imperative that the confidence of the 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 the 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.
“Government must compel DISCOS to massively invest in a metering programme that will totally eliminate estimated billing, which discos routinely resort to, to extort money from consumers to boost their revenue and make up for their inefficiencies.”
It advocated that the metering programme through the Central Bank, to fund locally made meters manufacturing bulk purchase should be accelerated.
OPS also implored government to adopt measures to ease the burden of industrial consumers even if it would be temporary arrangement. This is to enable them sustain operation and remain competitive without resorting to laying off employers.
“Such measures as the Eligible Customer Scheme, which has been approved by the Nigerian Electricity Regulatory Commission (NERC) but has been blocked by distribution companies must be allowed to come into play without any further delay.
The OPSN agreed to further engage with the NERC to discuss issues and concerns and formally present recommendations in relation to power tariff. “This should include high quality service focused on industrial clusters and business hubs.”
It promised to 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 service- based tariff structure.
