Tariff increase to worsen economic instability — Private sector
Says Nigeria ranked third on highest electricity cost
The Organised Private Sector (OPSN) comprising top Business Membership Organisations (BMOs) has stated that recent increase of electricity for Band A customers will aggravate the economic instability in Nigeria.
In a statement yesterday, the group, comprising 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 Scale Industralists (NASSI) and Nigeria Association of Small and Medium Entrepreneur (NASME), explained that the 200 per cent increase in electricity tariff is inimical to the survival of its businesses and would lead to unprecedented downturn in the productive sector of the economy.
The group noted that the astronomical increase is against the MYTO Order referenced NERC/2023/05, which valued the cost-reflective tariff at N114.8/Kwh (determined using exchange rate of N919.39/$1).
According to the statement: “It also does not reflect the current exchange rate reality that has seen the naira appreciate by 62.95 per cent over the dollar in the last one month.
“A closer look at the impact of increase in electricity tariff to N225/ kwh (determined using exchange rate of N1463.31/$1) on the cost profile of a medium sized company using 700kw revealed that the firm will need to pay about N1.4b per annum (700 x 225 x 24 x 365) for electricity.
“In China, a similar medium sized company will pay a little over N24m (700 x 94.14 x 24 x 365). Obviously, the new electricity tariff is outrageously higher, when compared with the going rates in countries with significant manufacturing performance.
“In the United States of America (USA), the United Kingdom, Germany, France, China, India, South Africa, Ghana and Benin Republic, prevailing electricity cost per kilowatt hour are $0.1545, $ 0.3063, $0.53, $0.0573, $0.076, $0.068, $0.0999, $0.123 and $0.195 respectively.”
The conversion values of the aforementioned electricity cost in naira are N191.38, N379.41, N656.50, N70.98, N94.14, N84.23, N64.53, N152.36 and N125.95 respectively.”
It said with the new tariff of N225/ kwh, Nigeria now ranks third after Germany and the United Kingdom on the list of countries with high electricity costs.
“The cumulative effect will be an escalation of the current high level of unemployment and insecurity in the country.” It added.
While calling for the suspension of the implementation of the new tariff, it said this is to enable all stakeholders to have meaningful dialogue around the process and methodology of determining electricity tariff as well as jointly agreeing on the transparent mechanism required for tariff setting.