Currently, there are conflicting signals on the hike in energy tariff in Nigeria. With effect from this September 1, electricity tariff will be racing upward going by a directive from Nigerian Electricity Regulatory Commission (NERC) to the 11 Electricity Distribution Companies (DisCos) to do so.
But, Eko Electricity Distribution Plc, has denied sending out information regarding hiking its tariff. In a statement signed by its Managing Director, Adeoye Fadeyibi, an engineer, “our attention has been drawn to news making the rounds in the media from unsubstantiated sources of a planned adjustment in electricity tariffs. Eko Electricity Distribution Plc would like to inform the general public to disregard all such reports not emanating from the management or the company’s website – www.ekedp.com.
“While we continue to review effective and regulatory strategies to manage the impact of changes to macro-economic indices affecting end-user tariffs, the general public will be duly informed, in the event of any changes to the end-user tariff.
‘’We advise all customers to disregard all communications that have not been issued by management or published on the company’s website www.ekedp.com. Please kindly contact our 24/7 customer care line on 07080655555, OR customercare@ekedp.com for further information for enquiries and a prompt resolution of any further queries or complaints.”
However, NERC in a letter titled Tariff Increase Notification gave the energy distributors the leverage to charge a service based tariff.
Before now the Commission confirmed that the electricity tariff has increased by two naira to four naira since January 1, 2021 to reflect increase in inflation and foreign exchange rates. The new increase then was the third time in five years under President Buhari.
NERC’s Assistant General Manager (AGM), Government, External and Industry Relations, Michael Faloseyi, in a statement said though the tariff increase for Bands D and E (Customers getting power below 12 hours daily) remain ‘frozen’, it however admitted that the tariff rates for even these classes of customers were ‘adjusted’ upwardly.
“In compliance with the provisions of the Electric Power Sector Reform Act (EPSRA) and the nation’s tariff methodology for biannual minor review, the rates for service bands A,B,C,D and E have been adjusted by N2.00 to N4.00 per kilowatt hour (kWhr) to reflect the ‘partial’ impact of inflation and movement in foreign exchange rates.”
In the meantime, Association of the Nigerian Electricity Distributors (ANED) is dismissing claims that the Distribution Companies (DisCos) has been pressurising NERC to suspend trading of electricity under the Eligible Customer Regulation (ECR) 2017.
ANED’s Executive Director, Research & Advocacy, Barrister Sunday Oduntan, made this known in a rejoinder said, “whilst the concerns of the author and the stakeholders behind the publication are misplaced and unfounded, we found it compelling to set the records straight on the issues brought forward in the said publication.”
DisCos also said they recognize the relevant provisions of the ESPRA 2005 and the ECR as well as their objectives, noting that there has been improvement in DisCos’ performance with more collaborations to increase efficiencies of the DisCos and indeed the entire value chain to achieve clean, safe and uninterrupted power supply to Nigerians.
“The regulation is therefore a welcome initiative provided that the stakeholders comply with the laid down procedures and requirements.
“In response to the insinuation that NERC and the Discos are colluding to frustrate the implementation of the regulation, we wish to state unequivocally that this is untrue, unfounded, preposterous, and irresponsible of the stakeholders who have failed to meet the requirements of the Regulation and attempting to pass the buck.” requirements of the Regulation and attempting to pass the buck.”
Likely, this is the fourth time the Buhari administration is hiking electricity tariff in six years amid Nigeria’s grim poverty profile.
And, while the Buhari administration has been busy claiming that it has lifted 10.5 million Nigerians out of poverty within two years, the World Bank has been asserting that inflation is plunging an additional seven million citizens into poverty.
Food prices have been rising in the country and pushing more people into poverty largely due to the continued depreciation in the value of the Naira. It has resulted in steep increases in the prices of imported food items, such as rice, sugar, milk, beverages, and frozen food.
And, with Nigeria’s rapid population growth, food supply in the country appears to be lagging demand. The population has been growing by about 2.6% per annum, while agriculture value added has been growing at 2%.
This implies that agricultural output is barely keeping pace with consumption. Unarguably, supply shortfalls are exacerbated by instability, banditry, attacks by insurgents, instability, poor infrastructure and of course, climate change. Also, there is the exodus of farmers to urban centres in search of illusive opportunities.
Nigeria’s grim poverty profile is certainly embarrassing for a country endowed with humongous human and natural resources. The country’s data agency, National Bureau of Statistics in 2020 disclosed that 40% or 83 million Nigerians were living in poverty.
Though this year’s has not yet been released, it is already being estimated that the number of poor people will increase to 90 million.
Going by the World Bank’s income poverty threshold of $3.20 per day, the poverty rate in Nigeria under President Muhammadu Buhari’s watch is said to be 71%. Compared to lower rates for some oil-producing developing countries like Brazil (9.1%), Mexico (6.5%), Ecuador (9.7%) and Iran (3.1%), Nigeria’s is indeed, grim.
National Bureau of Statistics data suggest that the number of poor Nigerians exceeds the total population of South Africa, Namibia, Botswana, Lesotho, Mauritius and Eswatini combined.This tends to show that what the country needs is more industrial production, foreign and domestic investment, and not electricity tariff hike and tokenistic handouts.
There has been too much emphasis on cash transfers by the Buhari administration, and less on building the capacities of Nigerians to transition into the sectors and jobs of the future. Those who know better have been arguing that cash transfers alone are inadequate and not pervasive enough for extricating a significant number of Nigerians from extreme poverty.
This is so because those who received cash payments under the national social investment programme risk falling back into poverty at the end of the programme. But structural transformation is more enduring, as it enables Nigerians to acquire and utilise productive capacities for permanently escaping poverty.
In the meantime, Nigeria Liquefied Natural Gas (NLNG) says it is not involved in the rising price of Liquefied Natural Gas (LPG), commonly known as cooking gas, insisting it is erroneous that it contributed to the supply shortfall of cooking gas in Nigeria and consequent hike in the price of the product in the country.
Many low income, and rural users of cooking gas have been plunged into using firewood and charcoal to cook because of the continuous rise in the price of the product.
A 12.5 kilogram (kg) of LPG now costs between N6,000 to N7,000 to fill in some locations in the county while it now costs marketers an average of N8 million to import 20 million tons of the product into Nigeria as against between N6.8 to N7.2 million it was a few months ago.
In a statement by its General Manager, External Relations and Sustainable Development, Mrs Eyono Fatayi-Williams, NLNG said the price of LPG in the domestic market was dependent on several market factors, including the forces of demand and supply.
While it is maintaining that on the supply side, it plays a pivotal role in the Nigerian domestic LPG market in line with the commitment it made to help deepen the market, NLNG revealed that it had recently increased the volume of its annual commitment to the market from 350,000 to 450,000 metric tons, saying that was about 100 per cent of its Butane production.
In 2020 alone, NLNG said it supplied over 80 per cent of its LPG sales (Butane/cooking gas) to the Nigerian market, adding, “it is also erroneous, to say the least, that NLNG contributes to the supply shortfall of cooking gas in Nigeria and consequent price hike. The price of LPG in the domestic market is dependent on several market factors, including the forces of demand and supply.
“On the supply side, NLNG plays a pivotal role in the Nigerian domestic LPG market in line with the commitment it made to help deepen the market.
“Recently, the Company increased the volume of its annual commitment to the market from 350,000 to 450,000 metric tons, which is about 100 per cent of its Butane production. Butane gas is less volatile and is, therefore, suitable for cooking. In 2020 alone, NLNG supplied over 80 per cent of its LPG sales (Butane/cooking gas) to the Nigerian market.”
The natural gas company said it has prioritised the domestic market by committing 100 per cent of its Butane production, thus realising its domestic supply target safely. According to NLNG, its current maximum Butane production meets about 40 per cent of domestic demand and that the balance was being supplied by other domestic producers or via imports.
While pointing out that its production alone is not sufficient for the Nigerian market, NLNG noted that in order to achieve its aspiration for the domestic supply, it has a dedicated 13,000 metric ton vessel, LPG Alfred Temile, that delivers the product to the market through Lagos and Port Harcourt terminals.
It says “the vessel’s delivery to these terminals are occasionally hampered by challenges at the terminal, including storage capacity, terminal access, draft restrictions and prioritisation of other products over LPG”, maintaining that its domestic LPG pricing was most competitive compared to all other alternatives (imported and domestic supply).
It also noted that several factors such as the newly introduced Value-Added Tax (VAT), foreign exchange and other factors impact the pricing of the product which is indexed to the international pricing model, adding that it is inaccurate to state that NLNG produces 22 Million Tonnes Per Annum (MTPA) of LPG.
While explaining that it is primarily an export company that produces 22 MTPA of Liquified Natural Gas (LNG) and 5 MTPA of Natural Gas Liquids (NGLs), it adds, “NLNG’s drive towards deepening the domestic LPG market is pivotal in line with NLNG’s vision of helping to build a better Nigeria. The company is optimistic that the eventual completion of its Train 7 Project will further will provide deepening the domestic LPG market.”
