“I live in one of Abuja’s sprawling estates and share an electricity meter with four other tenants. Looking at our power purchase history, in June 2020, with N11,350 we got 430.7 units of electricity, inclusive of service and VAT charges. By November 2020, N15,000 could only get us 288.5 units and in January 2021, we got N278.6 units for the same amount.
“As you can see, we are getting even less for more between June 2020 and January 2021 and these units do not last beyond 10 days. We had to adopt several measures to reduce our spending on electricity. The first thing we did was to restrict usage of air conditioners to night time alone but we realised that this didn’t help much so right now, we do not use air conditioners at all. We also don’t use heaters, hot plates and other such appliances, everyone uses only energy saving bulbs in their apartments and are encouraged to turn off appliances not in use at any time, to conserve power.
“This has helped a bit but there’s no doubt that the hike in electricity charges twice in the last four months by the distribution companies is stretching our already lean resources more.”
That was the reaction Elijah Ade, when 21st Century Chronicle sought to know how he was grappling with the recent hike in electricity tariff.
Though in recession, with attendant consequences of inflation, Nigeria has witnessed two hikes in electricity tariff in four months, that is between October 2020 and January 2021.
In September 2020, a proposed hike in electricity tariffs by the Federal Government was met with outrage by Nigerians, after which the plan was suspended, to allow time for more negotiations. The new tariff was, however, implemented in November 2020, to the dismay of the populace. While Nigerians were still yet to come to terms with the reality, there was another tariff increase in January 2020.
Reports showed that according to a Multi-Year Tariff Order (MYTO) signed by the Chairman of Nigeria Electricity Regulatory Commission (NERC), Sanusi Garba, on December 30, 2020, the new tariff increase took effect on January 1, 2021.
Consumers are, however, adopting different measures to cope with the new challenge.
Another consumer, Mrs Miriam Kuhe, a resident of Abuja, described the situation as “crazy.” According to her, before the tariff hike, she used to spend on average, between N10,000 and N15,000 for electricity every month but since the increase, she now buys power units for between N25,000 and N30,000 every month.
“I don’t know whether this one is a case of when life gives you lemons, you make lemonade but it has brought out the regulator in me,” she said.
“The tariff has doubled, compared to what we used to get before and so, one has to devise coping mechanisms. I’ve formed a regulating company for my house and I’m the chairperson.
Continuing, she said the freezers in the house are put on only at night and remain switched off during the day, to reduce energy consumption.
Reacting to the development, Senator Iroegbu, lamented that from N9,000 to N12,000 a month, he now spends between N25,000 and N30,000 on electricity units. He said even at that, the units last for a shorter duration than when he was spending less, as he was now getting fewer units.
“With N20,000, I get ridiculously low units, only 274 units, and this lasts barely two weeks,” he told 21st Century Chronicle.
To cope with the situation, he said his household had adopted some measures but it was still difficult.
Small businesses are also bearing the brunt of the new tariff, which they said has made the operating environment more hostile.
Owner of J-Empire Barber Shop, Kado Bmiko Village Gwarinpa, Junior David, said he now spends over N6,000 monthly, compared to N3,000 before the increment. He said he had been in the business for 10 years now but this period was the toughest for him.
Asked if the cost of his service had increased, he said while he had thought about it, it was difficult for him and would affect his business adversely, as most of his clients are low income earners.
“You can see the location of my business; even what we currently charge is too high for some people, many of who earn low incomes or none at all. Yes, it has affected my profit but rather than increase cost of services, I’ve reduced my spending and adjusted my lifestyle to be able to cope.
“The cost of rent has also increased, just like transportation and feeding. I now walk more, I eat two meals a day instead of three and buying new clothes is suspended for now,” he stated.
David further said he had decided to find a way around the situation because apart from himself, he has other dependents and the only resort if he discontinued the business because of the enormous challenges was crime.
Similarly, a welder in Bwari area council, Abuja, John Enelie, said the tariff had impacted his business adversely as his operating cost had increased, considering that his business is dependent on power.
“We now pay more for electricity but that is not all. You know that when the cost of one thing increases, every other thing does. The cost of welding materials has also gone up but to make matters worse, the customers are not there. Our business thrives when there is a lot of construction activity, which is also dependent on money in circulation and there is no money now,” he lamented.
He, therefore, called on the government to see to it that the tariff is pegged at a rate that does not stifle small businesses.
Hike will worsen Manufacturers’ woes – MAN
Also weighing in on the development, the Manufacturers Association of Nigeria (MAN) decried the hike, noting that it will increase its over N70 billion spending on self-generated electricity, decrease forex earnings and reduce government’s tax revenue.
MAN Director General, Segun Ajayi-Kadir, in a statement, said inadequate electricity supply was a major challenge bedeviling the sector, attributing it to the lull in performance by many sector operators for a long time now.
MAN accused the NERC of approving the tariff increase without recourse to stakeholders and the prevailing macroeconomic fundamentals congenial for an increase.
Even though the government ordered a suspension of the January 1, 2021 tariff increase, following threats of industrial action by labour unions, who accused the government of insensitivity to the plight of Nigerians, considering the last increment of November 2020, it remains to be seen what the outcome of government’s committee set up to work on the new tariff regime would be, as the committee is billed to complete its work and submit a report by the end of January 2021.
