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PMS, Electricity Hike And Nigeria’s Economic Quagmire

PMS, Electricity Hike And Nigeria’s Economic QuagmireBy Ayoola Olaitan

Amid the global financial crisis and consequent tough economic times, several nations have focused on providing sufficient palliatives to dissipate the losses and pangs on citizens. In Nigeria, however, the federal government has not only failed to make such palliatives available but also opted to increase the price of crucial commodities such as power and Premium Motor Spirit (PMS) commonly known as fuel.

Nigerians have become accustomed to various forms of policy framework and increment in charges depending on the economic hardship in the polity, but this twin economic missiles from the government has evoked wide spread criticisms and protests as they compound the woes of citizens struggling to adapt to the post COVID-19 pandemic era.

The Petroleum Pipeline and Product Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporations (NNPC), last week announced a new ex-depot price of N151.56k for petrol even as pump price is sold over N160 and N170per litre depending on your location in Nigeria.

Also, with effect from September 1, the tariffs being charged residential consumers receiving a minimum of 12 hours of power supply has increased by over 70 percent. Economic experts and other stakeholders have posited that the hike that is designed to further impoverish Nigerians.

This comes three months after the tariff hike implementation slated for July 1 was halted by the National Assembly, which prevailed on the distribution companies to shelve the date to the first quarter of 2021 due to the current economic challenges in Nigeria.

Recall that in 2012, President Muhammadu Buhari was part of the notable faces that led the nation wide protest against the increase in price of the previous administration. In 2020, the fuel price had increased up to three times, leaving Nigerians stunned as to the compassion of the President who is also the Minister of Petroleum Resources.

The Nigeria Labour Congress (NLC), vowed to resist the increase, the Manufacturers Association of Nigeria (MAN) also said the hike could precipitate recession in the third quarter of the year and the Lagos Chamber of Commerce and Industry.

Meanwhile, the Minister of State for Petroleum Resources, Timipre Sylva, has reiterated that the federal government is no longer fixing the pump price of petroleum products in the country.

According to him, “Government is no longer in the business of fixing prices for petroleum products, we have stepped back. Our focus now is on protecting the interest of the consumers and making sure that marketers are not profiteering.

The government’s futile attempt to distance itself from the hike of PMS price is laughable and the Nigerians cannot be deceived with the incessant claims that there is no longer subsidy on petroleum products.

President Buhari administration during its electoral promises before the election had promised to slash the price of petrol to N87 from N97. Today, the price of the product is about N160 per litre in the retail market, almost double the price he promised to maintain.

Protests broke out in Osun state on Friday last week, to protest against the recent hike in electricity and petrol prices, as demonstrations organized by the Coalition for Civil Societies kicked off from Freedom Park in the state’s capital Osogbo.

The protesters condemned the increase in electricity and petrol prices as the “highest level of insensitivity and wickedness from the President Muhammad Buhari-led All Progressives Congress government.”

Petrol prices in the oil-rich country have increased for three straight months, rising from slightly over 121 naira ($0.32) per liter in June to over 143 naira ($0.38) in July, 150 naira ($0.39) in August, and 162 naira ($0.43) in September.

The President of NLC, Ayuba Wabba, said in Abuja that the NLC and TUC would convoke a meeting this week to deliberate on modalities for an industrial action.

On the price hike, he said: “Clearly, the action of the Federal Government is most insensitive and an affront to the Nigerian people who are bearing the heavy burden of the COVID-19 pandemic. Everywhere in the world, governments are granting various types of palliative but ours is interested in piling more miseries on its citizens. We will resist this latest move to impoverish the mass of the working people.”

Speaking with MMS Plus on the increment in electricity tariff, the Director General of Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf said; “This is a moment of difficult choices.  The government does not have the fiscal capacity to fix the power sector. Therefore for private investments in the power sector to grow,  cost reflective tariff is inevitable.”

The LCCI boss stated that the alternative would be to classify electricity provision as social good which only the government could provide or subsidize.

“It is important to inspire the confidence of electricity consumers through a robust metering programme and guarantee of value for money.  Cost reflective tariff is a difficult option, especially given the prevailing economic conditions.  But it is the most sustainable option that would salvage the power sector and attract investment. However, It is important to fix the numerous inefficiencies that characterize the entire power sector value chain,” Muda said.

Nigerian Electricity Regulatory Commission (NERC) approved an increase in electricity tariff which took effect from Tuesday, September 1, 2020.

This came three months after the tariff hike implementation slated for July 1 was halted by the National Assembly, which prevailed on the distribution companies to shelve the date to the first quarter of 2021 due to the current economic challenges in Nigeria.

According to an NERC document, the new tariff is based on the hours of electricity supply available to the customers as those receiving less than 12 hours of supply, would have to pay more for electricity from September 1, 2020.

Customers are categorized into maximum demand and non-maximum demand customers, as against the previous categories of residential, commercial and industrial customers, with different bands (A to E) depending on the level of supply.

For Ikeja Electric, a residential customer on single-phase receiving a minimum of 12 hours of supply will now pay N42.73 per KWh, up from N21.30 per kWh.

Under the Eko Electricity Distribution Company, a residential customer on single-phase receiving a minimum of 12 hours of supply will now pay N43.01 per kWh, up from N24 per kWh.

At Electricity Distribution Company, a residential customer on single-phase receiving between 12 to 16 hours of supply will now be charged N45.69 per KWh, up from N24.30 per kWh.

Kaduna Electric announced on Twitter on Monday night that non-MD receiving between 12 and 16 hours will be charged N50.10 per KWh, adding that the tariffs for customers receiving less than 12 hours had been temporarily frozen.

It is ironic that a nation as blessed with natural resources as Nigeria is currently faced with various economic miseries from electricity tariff hike, fuel price hike, currency devaluation and insecurity.

Nigerian citizens would have to brace themselves for tougher economic times as the federal government introduced these increases in Premium Motor Spirit (PMS) and electricity tariff; but these are fiscal decisions that boggles the mind.

Although fuel marketers across the country adjusted their pump prices on Thursday to between N158 and N162 per litre of petrol, they posit that a further increase in global crude oil prices would push the pump price of petrol higher.

Petrol prices have increased for three straight months, rising from N121.50–N123.50 per litre in June to N140.80-N143.80 in July, N148-N150 in August and N158-N162 in September.

What have Nigerians done to deserve these actions from the government, perplexed Nigerian citizens’ query?

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