The Organised Private Sector in Nigeria comprising the Manufacturers Association of Nigeria (MAN), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), National Employers Consultative Association (NECA), Nigerian Association of Small Scale Industrialists (NASSI) and National Association of Small and Medium Enterprises (NASME) has stated that over 65% of businesses in Nigeria may shut down due to the over 200% hike in electricity tariff by the Federal Government.
The group disclosed this in a statement addressed to President Bola Tinubu on the need to suspend the tariff hike to save businesses, jobs and the economy in general.
According to the statement, the N225/KWh electricity tariff makes Nigeria the third country with the highest energy cost in the world just below industrial powers – the United States and Germany.
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What the group said
- The group said, “Clearly, with the new tariff of N225/kwh, Nigeria now ranks third after Germany and United Kingdom on the list of countries with high electricity cost. What is most worrisome with the Nigerian case is the fact that the electricity to be supplied is not adequate.
- “Also, the increase is coming on the heels of macroeconomic instability, infrastructure deficits, as well as other supply side constraints limiting the performance of the productive sector. Truth be told, over 65 percent of private businesses, especially manufacturing concerns and SMIs, may be forced to close down due to the high electricity tariff.”
Questions on the FX rate for new electricity tariff
Furthermore, the group noted that the exchange rate of N1463.31/$1 used in calculating the new electricity tariff for Band A customers does not reflect the current FX rate, considering the appreciation of the naira by around 62% in the last one month.
Also, the statement called on President Bola Tinubu to suspend the implementation of the tariff and allow stakeholders in the sector to discuss the acceptable parameters to be used in determining the electricity tariff.
It noted that the sudden hike in electricity tariff will increase the inflation levels and raise the prevalence of poverty across the country.
What you should know
Earlier in the month, the Nigeria Electricity Regulatory Commission (NERC) had announced a new electricity tariff of N225KWh for Band A customers, which it claimed constitute around 17% of total electricity customers in the country.
Recommended reading: Minister eyes reduction in electricity tariff as Naira strengthens in FX market
