MAN warns against electricity tariff hike

The Manufacturers Association of Nigeria (MAN) on Thursday warned the Federal Government against further increase in electricity tariff.

It also asked the government to commission a review of the performance of the DisCos after the last “unwarranted increase.”

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Daily Trust reports that the government had addressed recent reports regarding a potential 65% increase in electricity tariffs.

The Special Adviser to the President on Energy, Olu Verheijen, emphasised that the reports misrepresented her earlier statements and clarified that while tariffs currently cover approximately 65% of the actual cost of electricity supply, the government remains committed to ensuring fair pricing without imposing immediate hikes.

Verheijen was quoted as saying during the Mission 300 Energy Summit in Dar es Salaam, Tanzania, that the current power tariffs would rise by about two-thirds.

She was further quoted as saying Nigeria’s power prices need to rise by about two-thirds for many customers in order to reflect the cost of supplying it, adding that an increase should be expected within months.

But the Director-General of MAN, Segun Ajayi-Kadir, in a statement on Thursday, warned against the planned increase in electricity tariff, saying it will further exacerbate the impact of high cost of production, worsen the current inflationary pressure and aggravate the pressure on the disposable income of the average Nigerian.

“The proposed increase in electricity tariff is inimical to the competitiveness of Nigerian products and businesses as it will further exacerbate the impact of high cost of production, worsen the current inflationary pressure, aggravate the pressure on the disposable income of the average Nigerian, increase the unsold inventory of manufacturers, erode their profit margin, increase unemployment rate and lead to closure of more private businesses. 

“The persistent increase in tariff means that consumers will continue to bear the brunt of the inefficiency in the electricity value chain. As it stands, manufacturers are disadvantaged as the increase cannot be transferred to consumers who are currently battling with low purchasing power.”

The DG said he’s not certain that the Federal Government has reached the conclusion that electricity tariff would be increased, insisting that “I hope not.”

He asked the government to commission a review of the performance of the DisCos after the last “unwarranted increase.”

The DG also asked government to conduct a study on the impact of the increase on the manufacturing sector in particular, and businesses and households in general.

“Sincerely and critically interrogate the so-called cost reflective tariff template of the DisCos, and audit their level of commitment to investment in distribution infrastructure,” he said.

The association reiterated his call for increase in electricity supply from “the abysmal average of 4,000MW of electricity per day for over 200 million people”, saying Nigeria needs “more than 30,000MW of electricity to appreciably meet the growing electricity demands by businesses and households in the country.”