The Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) will picket the office of the Nigerian Electricity Regulatory Commission (NERC) and distribution companies (DisCos)’s premises nationwide on Monday over the hike in electricity tariff.
“We write to inform you of the picketing action scheduled to take place in the offices of the NERC and Electricity Distribution companies (DISCOS) in all states, including the FCT,” the unions said in a joint statement by NLC’s Ag General Secretary Chris Uyot and his TUC counterpart Anka Hassan
“The action will jointly take place on Monday, 13th of May, 2024 nationwide simultaneously. Therefore, the two Labour centres are directed to work together to carry out this important action. While counting on your usual cooperation, kindly accept the assurances of our goodwill and highest regards.”
This is just as the International Monetary Fund (IMF) has warned the Nigerian government to remove what it called implicit fuel and electricity subsidies.
In its latest report published, the IMF told Nigeria that the subsidies would guzzle three per cent of the nation’s Gross Domestic Product in 2024 as against one per cent in the year before.
According to the report, the IMF commended the Federal Government for, among other things, phasing out “costly and regressive energy subsidies”, saying this was critical to creating fiscal space for development spending and strengthening social protection while maintaining debt sustainability.
Meanwhile, the joint protest by Organised Labour followed a hike in the tariff for electricity consumers who enjoy at least 20 hours of daily power supply.
Though the NERC had reviewed the tariff, the labour unions said they were picketing the agency’s office as well as the premises of distribution companies after a Sunday reversal deadline failed.
The recent tariff hike for electricity consumers has continued to draw comments from several quarters.
With inflation rising to new highs and Nigerians grappling with the removal of petroleum subsidy, the increase in tariff was met with stiff opposition.
Human rights lawyer Femi Falana (SAN) had claimed that the Federal Government was raising funds for the “cash-trapped” DisCoS with the tariff hike.
But while defending the move, the Minister of Power Adebayo Adelabu said the Federal Government will pay about N1.8trn in electricity subsidy in 2024.
Adelabu, who argued that the Electricity Act, 2023 made provisions for the review of tariffs twice yearly, said on an edition of Channels Television’s Politics Today: “Review of tariff is actually legal once it is within the exclusive responsibility of the Nigerian Electricity Regulatory Commission (NERC). The Act actually provides for review twice in a year, every six months.”
Following the clapback generated by the move, the House of Representatives asked NERC to suspend the implementation of the tariff hike.
IMF, in canvassing for hike in electricity tariff, noted however that “adequate compensatory measures for the poor were not scaled up promptly and subsequently paused over corruption concerns. Capping pump prices below cost reintroduced implicit subsidies by end-2023 to help Nigerians cope with high inflation and exchange rate depreciation.”
The body also acknowledged that the price of electricity had tripled for high-use premium consumers on Band A feeders, 15 per cent of the 12 million customers who account for 40 per cent of electricity usage.
As Nigerians agitate for the reversal of the Band A tariff from N206.80 per kilowatt-hour to N68, IMF submitted that “the tariff adjustment will help reduce expenditure on subsidies by 0.1 per cent of Gross Domestic Product, while continuing to provide relief to the poor, particularly in rural areas.”
The IMF advocated that “once the safety net has been scaled up and inflation subsides, the government should tackle implicit fuel and electricity subsidies.”
It warned, “With pump prices and tariffs below cost-recovery, implicit subsidy costs could increase to 3 per cent of GDP in 2024 from 1 per cent in 2023. These subsidies are costly and poorly targeted, with higher income groups benefiting more than the vulnerable”.
The IMF reechoed that “as inflation subsides and support for the vulnerable is ramped up, costly and untargeted fuel and electricity subsidies should be removed, while, e.g., retaining a lifeline tariff.”
It projected that the implicit fuel subsidy could gulp as high as N8.4tn in 2024 from N1.85tn in 2023, N4.4tn in 2022, N1.86tn in 2021 and N89bn in 2020.
The electricity subsidy being paid to customers under Band B, C, D, and E was projected to stand at N540bn by the end of 2024.