The minister of power, Adebayo Adelabu has used the opportunity presented at the 8th Africa Energy Marketplace forum on Thursday in Abuja, to dispute claims that the new tariff has increased production costs for manufacturers, thereby driving up the prices of goods and services. He asserts that the new electricity tariff has led to a reduction in energy costs for consumers in Band A by 30 to 40 percent.
Why It Matters
Since the introduction of the new tariff system, there has been constant criticism, with claims that the tariff has added to the suffering of Nigerians.
Pleas have been made to the government to remove the new tariff system, arguing that it is not people-friendly. However, Adelabu asserts that the tariff adjustment was designed to address the economic hardships caused by high inflation and a weakening naira, not to exacerbate them. He emphasized that those in Band A should see a substantial reduction in their energy expenses when considering both grid supply and generator costs.
What They Are Saying
Adelabu clarified that for consumers in Band A, a thorough comparison of past and present energy expenses—including generator maintenance, diesel, and petroleum costs—reveals a 30 to 40 percent reduction in total energy costs.
“We are also electricity consumers, so we can attest to this fact,” he said. “It is true that if you are in Band A, your bill would have doubled, if not more. But when you consider what you have been spending on generator servicing, diesel, and petroleum, your costs would have decreased considerably.”
He argued that the claim that the new tariff increases production costs and consequently raises the prices of goods and services is illogical. “Manufacturers under Band A should have a lower energy cost by now, thereby reducing their cost of production, except for those who have not been paying for electricity in the past,” he added. “We can compare notes with practical examples, but the argument that this new tariff regime increases production costs is not valid because I am in that industry too.”
Bottom Line
Adelabu concluded by highlighting the paradox of Nigeria’s electricity challenges despite its abundant natural resources such as sun, water, and gas. He lamented that the sector has struggled to get it right for the past 60 years. The new tariff system, however, represents a step towards more efficient and cost-effective energy provision, aiming to reduce the overall economic burden on consumers and manufacturers alike.
