Electricity Tariff Hike: Is it Lawful?
2024. The warning was given by the team led by Mr Axel Schimmelpfennig, IMF Mission Chief for Nigeria that visited Lagos and Abuja, February 12–23, 2024, to hold discussions for the 2024 Article IV Consultations with Nigeria. Since about N1 trillion is allegedly spent on fuel subsidy per month, it means that electricity subsidy will cost N1.3 trillion.
Apart from the fact that these figures do not add up, the immediate past Minister of Finance, Budget and National Planning, Zainab Ahmed disclosed on March 12, 2022, that the Federal Government had quietly removed electricity subsidy. Speaking at a virtual meeting of African Finance Ministers and the IMF, Ahmed also said the amendment of the budget was ongoing to accommodate the incremental removal of fuel subsidy. The theme of the meeting was, ‘The Political Economy of Fiscal Reforms’.
On that occasion, Mrs Ahmed said, “We are cleaning up our subsidies. We had a setback; we were to remove fuel subsidy by July this year, but, there was a lot of pushback from the polity. We have elections coming and because of the hardship that companies and citizens went through during the Covid-19 pandemic, we just felt that the time was not right, so we pulled back on that. But, we have been able to quietly implement subsidy removal in the electricity sector, and, as we speak, we don’t have subsidies in the electricity sector. We did that incrementally over time, by carefully adjusting the prices at some levels while holding the lower levels down”.
At no time were Nigerians informed that electricity subsidy, had been restored. Was the N700 billion which Mr Adelabu said was spent on electricity subsidy in 2023, appropriated by the National Assembly? Whatever may be the case, it is indisputable that the IMF and the Federal Government are juggling figures of electricity subsidy to blackmail and deceive the Nigerian people. Whereas the IMF claims that "fuel and electricity subsidy will cost Nigeria N2.33 trillion" in 2024, the Minister of Power has given a subsidy figure of N3 trillion. Curiously, the Federal Ministry of Finance has failed to reconcile the conflicting figures being peddled around by the IMF and Ministry of Power.
Another reason adduced for the hike in electricity tariff, is that Band A customers should enjoy a minimum of 20 hours of power supply per day, and all Discos have been authorised to implement the policy immediately. But, the electricity distribution companies (DisCos) have started publishing their inability to meet the required 20 hours per day power supply for Band A customers, as directed by the NERC. Having not met the conditions stipulated by NERC, the DisCos have forfeited the right to sell electricity at the rate of N225 per kilowatt. The DisCos should refund the funds collected since April 3, 2024, while the NERC should withdraw the approved electricity tariffs without any further delay.
“The new tariff rates take effect immediately, and will apply to these customers from the April billing cycle.This signifies the phased transition, from the Government backed subsidy regime to a competitive market.The tariff rates for other customer classes remain frozen, subject to further policy direction from the Federal Government”