Electricity tariffs hike: NLC accuses FG of doublespeak, insists on government’s respect for agreements

By Joy Okosieme

Nigerian workers have accused the Muhammadu Buhari led Federal Government of insincerity with respect to ongoing negotiations over the hike in electricity tariffs.

The umbrella body of Nigerian workers, the Nigerian Labour Congress(NLC) in a statement on Thursday signed by Comrade Ayuba Wabba, its President, flayed the Buhari government of doublespeak over the recent increase in electricity tariff by electricity distribution companies(DISCOs).

In the statement titled, “SETTING THE RECORDS STRAIGHT!
REVERSING THE RECENT INCREASES IN NIGERIA’S ELECTRICITY TARIFF STRUCTURE IS NOT ENOUGH!!, the NLC said it viewed with concern and apprehension, a statement credited to the Minister of Power, Engineer Saleh Mamman where he denied the recent hike in the cost of electricity by the DISCOs.

The NLC said if the intention of the Minister was to allay the fears of ordinary Nigerians that we would not start the New Year on the pedestal of intensified hardship, then the contradictions in his statement only succeeded in reinforcing the anxiety by Nigerians that they yet again face a year where the biggest pre-occupation of government appears to be the deflection of the worst economic vicissitudes on citizens.

“In one breath, the Honourable Minister debunked any increase in electricity tariff especially for Nigerians who are grouped under Band D and E tariff structure. In the same statement, the Honourable Minister admitted that there have been adjustments in what customers across the five bands pay. He attributed this increase to minor adjustments owing to current inflation levels and forex realities. The import of statements like this is that they do not only confuse citizens but also confound them on the genuineness of government intentions and actions. The chief casualties in situations like this is public trust and confidence in government.

“The events of the past three months have severely tested the confidence of Labour in the ability of government to negotiate in good faith and keep to its promises. We wish to set the records straight that the decisions taken by government since our negotiation in September 2020 in tinkering with the electricity tariff is anomalous with the spirit and letters of our agreement”, the NLC said in the statement.

The NLC said the understanding it had with government was to suspend further increases in electricity tariff until the committee set up by government and labour are able to iron out the incongruities in Nigeria’s electricity sector. It said that while the committee was yet to conclude its assignment, government unilaterally hiked electricity tariff, a development it described unfortunate and totally unacceptable.

According to the NLC, in the new tariff structure as advertised by many of the DISCOs, the price adjustment was not minor as some of the increases were up to 60% to 100% across all the bands. It decried the excuse of reflecting or transferring the volatilities in foreign exchange and loading the current rate of inflation on workers and other consumers already badly buffeted by the downturn in the economy signals as an attitude of insensitivity by government noting that even the poorest of the poor in Band D and E, by the admission of the Power Minister, were not spared of this new burden.

“From the feedback we have so far gotten from our representatives in the Technical Committee on the Review of the Electricity Sector, four things stand out in the state of affairs in the electricity sector. First is the unsustainability of using international economic indices to determine domestic electricity tariff. Something is inherently wrong in calculating in United States dollars the cost of the gas used by GENCOs in generating electricity in Nigeria. The current practice violates fundamental economic theory of comparative advantage especially for a developing economy as ours. Related to this is the calculation of ancillary electricity supply logistics in foreign currencies and transferring same to electricity consumers.

“Second is the perversity of offloading the cost of electricity capital accumulation on end consumers. It is tenuous and economically unreasonable for electricity generation and distribution companies to upload the cost of acquiring their equipment and operational facilities to electricity consumers. This has occurred at two distinct levels so far. The bailout fund to DISCOs from public coffers was one instance. The other instance is the inbuilding of equipment importation cost into what consumers are paying. The Honourable Minister conceded this much when he talked about minor adjustment in light of foreign exchange realities,”the labour leadership noted.

The NLC said in other capitalist climes, investors procure their working capital from profits accruing from their investments not from uploading and transferring the cost of capital acquisition directly to consumers. It said if the Nigeria Electricity Regulatory Commission (NERC) continues to use “this strange template” to design and review its tariff template, then there would be no end to continuous increases in what Nigerians pay for electricity noting that amid the current electricity tariff volatilities, the situation of the average consumer would be worsened by the current reliance on alternative sources of energy owing to prevailing instability in public power supply.

The NLC statement noted that another feedback it got from its representatives in the Technical Committee on the Review of the Electricity is the opacity in the predisposition of the Nigeria Electricity Regulatory Commission (NERC). It said feelers from many stakeholders in the electricity supply chain suggest that the regulator in the sector pulls more on the side of the DISCOs and GENCOs rather than on the side of consumers of electricity both industrial and private user noting that the lack of representation of critical mass of electricity consumers in NERC has aggravated this concern.

“From the foregoing, there is no gainsaying the fact of acute adversity imposed by the Power Sector Reform on ordinary Nigerians and the manufacturing sector. This reinforces our earlier calls for a holistic review of the entire power sector privatization program as it has clearly failed to achieve the economic goals set forth in Chapter Two of Nigeria’s Constitution especially with regards to protecting the economic welfare of citizens and in violating the Constitutional expectations that the commanding heights of the Nigerian economy should be managed by the State.

“While we wait for the Technical Committee on Review of Nigeria’s Electricity Sector to conclude its work, the Nigeria Labour Congress calls on government to go beyond the reversal of the recent tariff increases to adorn the robe of gentlemen negotiators. We demand that all commitments made by government to Organized Labour during our recent negotiations be respected. We also demand a cessation to unilateral actions that only undermine the spirit of social dialogue and erode the confidence of Nigerians on the intentions of government”, the statement said.

The NLC said its return to the negotiation table will be premised on firm assurances and commitment by government that future negotiations will be done in utmost good faith.