The Nigerian government’s increase in electricity tariffs based solely on the amount of electricity supplied rather than electricity consumed is not justifiable for several reasons.
Development Diaries reports that the Nigeria Electricity Regulatory Commission (NERC) recently announced a significant increase in electricity tariffs for Band A consumers.
We understand that those under Band A, which accounts for about 15 percent of all power consumers in the country and is guaranteed up to 20 hours of supply every day, would now pay N225 per kWh, a startling 240 percent increase over the previous rate of N68/kWh.
While it may seem like a straightforward approach to recovering costs for electricity generation and distribution, such a method fails to account for important socioeconomic factors and can disproportionately burden consumers, especially in a country like Nigeria.
This increase has rightly been condemned by both manufacturers and the organsied labour, as they emphasised the potential consequences for the economy.
There are valid fears that the increase will cripple production, make inflation worse, and impede the expansion of small and medium enterprises (SMEs).
In addition to this, doubts exist regarding whether Nigerians will be able to access the promised 20 hours of electricity per day.
Nigeria still struggles with inefficient electricity distribution networks, while high transmission losses due to technical inefficiencies and theft lead to a significant gap between electricity supplied and electricity consumed.
Hence, increasing tariffs for certain consumers based on the total supply rather than what they actually use unfairly places the burden of these inefficiencies in distribution on end-users.
Tariffs should be fair, transparent, and reflective of actual consumption because billing based on consumption encourages responsible energy use and ensures that consumers are charged fairly for the services they receive.
Increasing tariffs for Band A or those that have a higher daily electricity supply is not justifiable. A Band B consumer can have a higher daily consumption than a consumer in the Band A category.
Tariffs should be the same all over the country and the amount of electricity consumed by individual customers should determine the financial implications.
Development Diaries calls on NERC and the Ministry of Power to explore alternative solutions such as adopting and implementing smart grid technologies to improve system efficiency and reduce losses instead of burdening consumers with higher tariffs.
In light of the inefficiencies in power distribution, we also urge the Ministry of Power and NERC to reconsider this decision and prioritise billing based on electricity consumed, not the amount supplied.
Photo source: TCN