It is unthinkable that the authorities could ever broach any form of hike in another of their public services at a time like this. It is utterly incautious to do so. But that is precisely what the Federal Ministry of Power is contemplating.
The Minister of Power, Adebayo Adelabu, last week addressed a press conference and lamented that government was finding it difficult to sustain the subsidy on electricity supply, necessitating a possible increase in the tariff; what he called the implementation of cost-reflective tariff.
Government’s bugbear, according to him, is humongous debts. He said government can no longer continue to subsidize electricity supply because it has incurred huge debts in its efforts to continue to fund that utility.
“Today,” Adelabu said, almost in a fit of exasperation, “we owe a total of N1.1 trillion to the power generating companies… Today, we have a legacy of debt to the gas companies of $1.3billiom at today’s rate. That is close to N2trillion.” He explained that over N2trillion would be required to sustain electricity subsidy this year, whereas only N450 billion was budgeted.
True, the authorities appear to be mired in a grim situation, grappling with this level of indebtedness vis-a-vis the burden of running the subsidy on electricity supply. However, whatever the allure of arguments that may advance government’s impulsion, it still smarts of insensitivity to bring forward a raise in the electricity tariff at this time. It is immoral, vexatious and indecorous to contemplate passing the burden of withdrawing subsidy in another public utility on the already impoverished populace eight months after the sudden withdrawal of fuel subsidy.
It amounts to an overkill to attempt so soon to heap another stack of burden on the average Nigerians, who are already sagging under the grueling weight of economic hardships foisted on them by the astronomical rise in the costs of living arising from the fuel subsidy removal.
Yet, the minister’s move is not entirely unexpected. He had flown what appeared to be a kite on the tariff matter in November, last year. Shortly after the ministerial retreat organized by the new presidency to spruce up the cabinet members for the tasks ahead, Adelabu had addressed the press and gave a hint that there was a move months back to raise electricity tariff.
But according to him, President Bola Ahmed Tinubu had demurred and stopped the move. He said Mr President had insisted that stable power supply must be achieved before the cost-reflective tariff in electricity supply(a euphemism for a hike) could be implemented.
Adelabu had said then: “You cannot jump overnight and implement the cost-reflective tariff. I can tell you that till today, the government is still subsidizing power. Tariff should have been raised months back but Mr President said until we are able to achieve regular and incremental power supply, we can’t touch the tariff.
“So, there is a huge gap between the cost-reflective tariff that we are supposed to charge and the allowed tariff. That huge gap the government is still handling as subsidy. This affects liquidity in the system, investments and so many constraints.”
Adelabu had emphasized that “political reasons” and “empathy” were the twin-checks placing a lid on the implementation of the cost-reflective tariff. “You cannot cause additional burden on Nigerians,” he had rightly evinced then, adding: “We just had the removal of fuel subsidy. We are talking about the exchange rate skyrocketing, galloping inflation and so many others, that bring hardship to the people… So, it is not politically expedient and reasonable to now implement a tariff that is much like dumping the existing tariff.”
The Minister gave a window to the subsidy regime. According to him, N70 per kilowatt per hour(kw/h) was being charged then, but going by the exchange rate, the cost-reflective tariff that government ought to charge was between N130 and N140 kw/h, “because part of the incremental tariff is the price of gas, which is paid in dollars.”
He then dropped the clincher: Tariff will be increased at the appropriate time, after a lot of sensitization and communication with the public. He added that there would also be incremental and regular power supply before that is done. So, his press conference last week was part of the sensitization towards removing the subsidy from electricity supply.
The Minister’s contemplation verges on the odius, to say the least. As we have noted earlier, it is oddly to talk about any hike now. The big question is: what has changed between November, last year and now, just four months after?
First, Adelabu had before now demonstrated a good grasp of the political inexpedience, which clearly obviates any further talk of tariff hike. The hardships engendered by the fuel subsidy removal, as he acknowledged then, rather than abate, are increasing. Inflation is galloping as the costs of living are daily spiraling. The misery is deepening. Hunger is stalking homes. And Nigerians are riled up.
The turn of events is incredulous and and unfortunate because the savings from the subsidy removal were supposed to improve the people’s lives but they have instead impoverished and debased them.
Revenue is streaming in. The three tiers of government are sharing fat slices of the national cake every month, but there is not much to show for it because the funds are dissipated int inane and outlandish ventures, especially at the state level. It is not clear how the palliatives put together to cushion the pains of the subsidy withdrawal are being managed because the ordinary Nigerians are not being palliated!
Second, although there is a slight and relative improvement in power supply, but it is far from being stable. Businesses are folding up because of a largely erratic power supply. Some multinational manufacturing concerns are relocating from Nigeria, citing poor power supply as one of the major bottlenecks that stifled them.
The Senate last Wednesday debated a resolution raised on the matter by Senator Aminu Abass(PDP, Adamawa Central). The kernel of the resolution was for the upper chamber to reject any move by the Federal Government or any of its agents to hike electricity tariff because it would worsen the economic hardships already walloping the people.It was adopted by massive voice votes.
The Senators in addition mandated the Senate Committee on Power to investigate the over N2trillion which, according to the minister, would be required to fund subsidy this year.
We laud the senators for this bold and timely resolution. We cannot agree more with them. True,the element of gas as a core input in power generation makes the task of sustaining subsidizing electricity supply an arduous one. Gas is said to constitute between 70 and 80 per cent of the raw materials for generating power as all our six thermal plants— Olorunsogo, Geregu, Egbin, Omotosho, Afan and Sapele— are gas-powered and gas is dollar-costed.
However, apart from erratic power supply that obviates any hike in tariff for now, it is glaringly ill-timed to talk about any subsidy removal now unless the authorities want to further incense the people. Any attempt to implement the cost-reflective tariff now could ignite obstreperous outbursts and inflame incendiary passions, the outcome of which will be unpredictable.
Rather than pass the burden to the people, government should put heads together and find a way round the problem. One way out is to foster a private-government partnership funding arrangement that could see well-heeled Nigerians taking a chunk of the burden of subsidy funding off the government. States can also be assisted to generate a substantial percentage of their own power consumption, especially now that they have more money to play around with.
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