OPSN says 57% electricity tariff hike in Nigeria unacceptable until transmission, distribution improve  

Manufacturing

 

THE Organized Private Sector in Nigeria (OPSN) said “An increase of 57 percent in electricity tariff for 2020 up to 2024 at this time is unacceptable until transmission and distribution of the commodity improves in the country”

The OPSN body comprises Manufacturers Association of Nigeria (MAN), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA); Nigerian Employers Consultative Association (NECA); Nigeria Association of Small Scale Industrialists (NASSI) and Nigerian Association of Small and Medium Enterprises (NASME).

In a statement signed by the leaderships of the body, said: “The OPSN is not in support of any minor, major and extra-ordinary tariff review or the proposed upward review in electricity in an economy that just came out of recession and currently experiencing fragile growth such extra-ordinary upward review will be counterproductive on consumption and productivity.”

It noted: “The reviews in electricity tariff since Multi Year Tariff Order (MYTO) 2015 has produced escalation in tariff between 2015 and 2020 across the ‘D’ electricity tariff categories.

“ For instance, with IKEDC, D1 category tariff increased by over 44% from 2015 to 2020; D2 and D3 by over 50% for the same period respectively. The increase and burden of cost of electricity for the same period are even more in the other electricity distribution companies where tariffs are quite higher.

“The expected spike based on NERC proposed increase in tariff from 2020 up to 2024 would increase by 57% for the D1, D2 and D3 categories a piece from 2020 to 2021 and even higher 2022, 2023 and 2024 under Ikeja Electric, which is the DisCos with the least tariff. By this metrics therefore, the impact of the proposed tariff increase on the manufacturing sector will be enormous.”

 

Anticipated Impacts

Strategic private sector businesses with high electricity intensity processes, especially like Basic Metal, Iron and Steel and Fabricated Metal Products; Domestic & Industrial, Rubber and Foam; Non-Metallic Mineral Product; and Chemical & Pharmaceuticals sectoral groups would be worse-off;

 “Also, capacity utilization will further diminish; contribution to GDP will decline; employment in the sector will drop; foreign exchange earnings from the sector (as high cost production feeds into export commodity prices) will dip.”

 

Unmet Generation capacities over the years

“Various projections for generation capacities for different years were made by the government. For instance, 5,500MW was projected for 2012; 7,500MW for 2013; 9,061MW for 2014; 10,071MW for 2015 and 10,571MW for 2016.

Also, energy to be sent out to grid was projected at 30,715 GW for 2012; 41,884GM for 2013; 50,601 GW for 2014; 56,242 GW for 2015; and 59,034 GW for 2016.

Questions Begging for Answers

 The pertinent questions are therefore, wouldn’t they have been accomplished? Wouldn’t it better to think more on how to improve generation capacity hence transmission and distribution rather than squeezing the mere 4000MW to meet all revenue needs of key sharing stakeholders?

OPSN believes that fixing the sector is not rocket science, basic requirements are pragmatic processes; pro-electricity policies; and significant investments to improve transmission and distribution infrastructure, increase the generation capacity and other capacities that will usher in scale production in the sector.

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