Manufacturers kick as Nigeria agrees to subsidise electricity tariffs for 3 months

*VAT proceeds to temporarily subsidise tariffs whilst my Committee will work for two more months to resolve other issues that may substantially affect tariff adjustments ─ Festus Keyamo, SAN, Minister of State for Labour and Employment

*The tariff differences in some instances are as high as 25 percent are making it impossible to ensure fair competition among manufacturers, says MAN

Alexander Davis | ConsumerConnect

Sequel to the latest discussion between the Nigerian Government and Organised Labour over the recent increase in electricity tariffs, the Federal Government has agreed to provide a tariff relief of 10 Naira 20 Kobo (N10: 20K) per kilowatt of electricity for the next three months.

Mr. Festus Keyamo, SAN, Honourable Minister of State for Labour and Employment, who announced this development in a communiqué via his verified Twitter handle, stated that the government also would massively distribute free meters to electricity consumers in the country.

ConsumerConnect reports the Minister’s announcement followed the expiration of the 2-week suspension of the increased electricity tariffs Sunday, October 11, 2020.

Keyamo said the “Labour & Govt have adopted these Resolutions of the Adhoc Committee I chaired.

“Highlights include using VAT proceeds to temporarily subsidise tariffs whilst my Committee will work for two more months to resolve other issues that may substantially affect tariff adjustments.

“Other immediate reliefs include the provision of six million free meters to Nigerians, salary protection for electricity workers, a mandatory refund for any overbilling during system transition by the discos, monthly publication by NERC of allowed billing of unmetered customers, etc.,” he said.

The Minister as well disclosed that the Adhoc Committee set up by the Federal Government and Organised Labour in September agreed to adopt a two-phase approach to proffer solutions to resolve issues in the sector on a medium-term basis.

It is recalled that the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) had suspended its planned industrial action after the Federal Government suspended the tariff increase pending the outcome of their negotiation late last month.

However, the Manufacturers Association of Nigeria (MAN) has faulted disparity in power tariffs by the electricity Distribution Companies (DisCos) in the country.

Engr. Mansur Ahmed, President of MAN, in a statement, noted that it creates an uneven playing ground which may lead to closure of some companies in Nigeria.

Ahmed stated that the tariff differences in some instances are as high as 25 percent making it impossible to ensure fair competition among manufacturers.

The MAN President urged the Federal Government to prevail on the DisCos to regularise the varying costs of electricity tariffs across different states for the purpose of creating a level-playing ground for the manufacturers.

He said: “Most worrisome is the fact that manufacturers who are made to pay higher tariffs sell their products in the same market, and cannot afford resultant effects of wider gap in the prices of products as competitors in the industry.

“These tariff differences in some instances are as high as 25% making it impossible to ensure fair competition among manufacturers.

“The resultant effect of this tariff differential is that manufacturers under the DisCos with higher tariff rate sell at loss in order to sustain the market share and if action is not taken urgently, the affected manufacturers may be forced to close down with looming adverse effect on employment and the economy.”

MAN has therefore appealed for uniformity in tariff and in the event where the disparity has to be maintained due to the difference in commercial activities.

The Association also called on the Federal Government to intervene with the establishment of an equalisation fund as it is in the petroleum sector to support DisCos with smaller number of customers in order to ensure uniformity in tariff across the country.