The Organised Private Sector of Nigeria (OPSN) has called for the suspension of the implementation of the new electricity tariff hike.
The OPSN, via a statement in Lagos, said the call was to enable all stakeholders to have meaningful dialogue around the process and methodology of determining electricity tariff.
The statement was signed by the director-general of the Manufacturers Association of Nigeria (MAN), Mr Segun Ajayi-Kadir, on behalf of the OPSN.
The federal government through the National Electricity Regulatory Commission (NERC), announced an increase in tariff for users under the Band A category, effective April 3.
The new rates mean a hike from N67 per kilowatt-hour to N225 per kilowatt-hour translates to a 241 increase for the users.
Ajayi-Kadir stated that the call for suspension was to allow the OPSN and electricity bodies jointly agreeing on the transparent mechanism required for tariff setting.
He said the OPSN had received numerous complaints from its member-companies on the implications of the recent astronomical increase in electricity tariff without the required and proper consultations with the private sector.
He stated that this sudden increase in the face of inadequate electricity supply was inimical to the competitiveness of Nigerian products and businesses and would definitely exacerbate the impact of high cost of production.
“Meanwhile, the astronomical increase is against the MYTO Order referenced NERC/2023/05, which valued the cost-reflective tariff at N114.8/Kwh (determined using exchange rate of N919.39/$1).
“It also does not reflect the current exchange rate reality that has seen the Naira appreciated by 62.95 per cent over the dollar in the last one month.
“A closer look at the impact of increase in electricity tariff to N225/kwh (determined using exchange rate of N1463.31/$1) on the cost profile of a medium sized company using 700kw revealed that the firm will need to pay about N1.4 billion per annum (700 x 225 x 24 x 365) for electricity.
“In China, a similar medium-sized company will pay a little over N24 million (700 x 94.14 x 24 x 365).
“Obviously, the new electricity tariff is outrageously higher when compared with the going rates in countries with significant manufacturing performance,” he said.
Ajayi-Kadir added that with the new tariff of N225/kwh, Nigeria now ranked third after Germany and United Kingdom on the list of countries with high electricity cost.
He said what was most worrisome with the Nigerian case is the fact that the electricity to be supplied is not adequate.
He added that the increase was coming on the heels of macroeconomic instability, infrastructure deficits, as well as other supply side constraints limiting the performance of the productive sector.
