• Thursday, July 18, 2024
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FG insists on electricity tariff hike, labour threatens action

Electricity reliability: When will the state wake up?

The Federal Government dug in its heels on Friday, refusing to back down from the controversial 240% tariff increase for Band A electricity consumers despite widespread opposition. This move throws has made the Nigeria Labour Congress to tell the Federal Government to prepare for the consequences of the tariff hike.

Subsidy axe falls on high-power users

The new policy scraps electricity subsidies for Band A customers, a group representing roughly 15% of the national grid and identified as receiving up to 20 hours of daily power supply. Previously, these consumers paid N68 per kilowatt-hour (kWh). Under the new regime, that price skyrockets to N225 per kWh.

Government cites unsustainable subsidy burden

Justifying the hike, Power Minister Adebayo Adelabu emphasized the crippling cost of subsidizing electricity. He revealed that the government was shouldering a staggering 67% of power generation, transmission, and distribution expenses – translating to an estimated N2.9 trillion in 2024, exceeding 10% of the national budget.

Adelabu argued that such a significant resource allocation towards a single sector was untenable, especially with other vital areas like education and healthcare competing for funds. He framed the tariff increase as a necessary evil, freeing up N1.4 trillion for investment in these neglected sectors.

Short-term subsidy, long-term cost-reflective tariffs

The Minister attempted to soften the blow by emphasizing the temporary nature of the subsidy removal for Band A customers. He outlined a three-year plan to phase out electricity subsidies entirely, with Band A serving as a “pilot phase” for this transition towards a cost-reflective tariff system.

Labour vows retaliation, manufacturers cry foul

The Nigeria Labour Congress (NLC) reacted furiously to the government’s stance. Benson Upah, Head of Information for the NLC, accused the government of prioritizing the dictates of the World Bank and IMF over the welfare of Nigerians. He warned of “consequences” for this “unpopular” policy, hinting at potential labour unrest.

Manufacturers echoed these concerns, fearing the hike would cripple businesses and exacerbate inflation. They pointed out that high electricity tariffs have historically hampered, not helped, manufacturing growth, even in developed nations.