The Federal Government says it spent over N500bn on subsidy on electricity in the last five years, and it is now cash-strapped to continue such spending.
The Organised Private Sector of Nigeria said this, emerging from the meeting it held with the FG through the Special Adviser to the President on Infrastructure, Ahmad Zakari on Friday September 4, 2020 in Abuja.
The OPSN comprised the Nigerian Association of Chambers of Commerce Industry Mines and Agriculture, the Manufacturers Association of Nigeria, the Nigeria Employers’ Consultative Association, the Nigerian Association of Small and Medium Scale Enterprises, and the Nigerian Association of Small Scale Industrialists.
In a statement titled:’Organised Private Sector of Nigeria meets presidency on the electricity tarriff’, the leadership who are operators in the private sector said it had demanded the justification for the recent electricity tarriff hike, at a time when Nigerians were facing increasing hardships.
The OPSN also said they equally questioned the rationale for increment with the unemployment had risen to 27 per cent while many factories had shut down.
They said the FG then stated the serious financial quagmire it had found itself which has made it impossible to continue to sink hundreds of billions of naira into the electricity industry without any positive improvement.
The statement read partly,”On Friday 4th September, 2020, the leadership of the Organised Private Sector of Nigeria met with the Buhari Administration through the Special Adviser to the President on Infrastructure for extensive discussions on the increase in electricity tariff which took effect on 1st September, 2020.
“The OPSN had called on President Buhari’s Government to Justify the necessity for this tariff increase at a time when the economy is facing a potentially deep recession and Nigerians are facing increasing hardships, with unemployment rising to over 27 per cent as many factories are facing total closure.
“The Special Adviser informed the meeting of the serious financial quagmire in which the Government has found itself which has made it impossible for the Government 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 N165bn in 2015 to over ₦500bn in 2019 superseding the FGN budgetary allocations to health and education combined. ”
They added that the FG said this was unsustainable as it no longer had 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 lacked access to electricity.
The OPSN, however, insisted that the FG must create conditions that would attract private investment in the industry for which cost reflective tariff was inevitable.
They equally noted that “it is mperative that the confidence of 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 electricity supply.”
They also demanded, “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 distribution companies to massively invest in a metering programme that will totally eliminate estimated billing which they (Discos) routinely resort to, to extort money from consumers to boost their revenue and make up for their chronic inefficiencies.”
The OPSN also called for the implementation of the measures that would ease the burden of industrial consumers, even if as temporary arrangements.
They added that in the interest of the increasing number of Nigerian workers who are facing retrenchment under the prevailing high cost operating environment, the government must explore all avenues for supporting industries to remain viable.
The OPSN said the FG must prevail on the Central Bank of Nigeria to review its recent decision on payments of imports.
They said the government should also review the current policy on border closure; help to resolve the current dispute between the Manufacturers Association of Nigeria and Distribution Companies which has resulted in a never- ending litigation.
They said this litigation “is holding back the utilisation of over 5000MW of stranded electricity which is not deliverable to consumers.”
The OPSN wanted the government also to prevail on National Electricity Regulatory Commission to be more firm and fair in dealing with stakeholders in the electricity supply market.