Hike In Electricity Tarrif: Why The Poor Will Never Breathe

The recent 240 percent hike in electricity tarrif in the country joins the list of the series of neo-liberal policies this country has continued to embrace since the dawn of the current democratic dispensation in 1999. This instance of partial withdrawal of electricity subsidy has been raising dust, but as always happens, the dust will soon settle and the citizenry brace for a yet added burden in their life of endless anguish.

Last year, in the early days of the Godswill Akpabio-led Senate, that upper legislative chamber passed a motion to let “the poor breathe.” The social media clip of that seemingly comic moment when the Senate President tapped the gavel to indicate the adoption of the bizarre motion became an object of mockery among Nigerians many of whom felt the National Assembly was being too unserious. Truth, however, is that not many people knew the full story behind that episode. What had happened was that a senator had moved a motion urging the federal government to shelve the idea of hiking electricity tarrif in order to “let the poor breathe.” While calling for a voice vote on the motion, Akpabio copied the exact phrase of his colleague that moved the motion – “let the poor breathe.” So the Senators (perhaps unanimously) adopted the motion to “let the poor breathe.”

Those who carefully did the job of cutting out the earlier part of this video recording of that legislative episode to share only the brief part that sounds bizarre and ridiculous have definitely achieved their comic objective. However, they may have succeeded in diluting or completely extirpating a topic of discussion that is of grave humanitarian and national consequence (I am always cautious about social media video clips given the knowledge that many times the manner of their editing may have damagingly torn the reported event out of context).

Months after that motion was adopted, the said hike in electricity tarrif has become a reality. But then the National Assembly ought to have known that it lacks the moral force to persuade the Bola Tinubu presidency not to mplement a policy that will increase the yoke of the common people. The supposed assembly of the people’s representatives has, by its conduct, failed to demonstrate that it is sincerely committed to a path it was urging the President to toe. The members, irrespective of party affiliation, embraced with wide-open arms the ₦160m SUV largesse without at all caring about the fact that this level of rapacity is such that further tightens the noose on the neck of the poor to further stifle their breath. Again, the same National Assembly is yet to extricate itself from a scandal of budget padding, hence, morally speaking, it lacks the persuasive power to moralise when it comes to electricity tarrif. If the subsidy on electricity is not reduced or removed, how would such luxury as SUV be funded? From where would the excess funds that would facilitate budget padding come?

It has been the stock in trade of our political class to delegitimise welfarist policies geared towards making life easier for common people. Efforts are made to present money used for subsidy as wasted resources. This tendency started becoming pronounced under the Obasanjo administration when the government did everything to convince us that fuel subsidy is wasteful and needless. Similarly, the government of the day started showing its discomfort towards educational subsidy at the tertiary level. Today, that tendency is gaining momentum with comparison being made with western nations where people pay much higher for university education. This comparison completely refuses to see the vast difference in personal income levels between our nation and these developed nations. The fact that some foreign nations offer free university education to their citizens is also deliberately discountenanced.

More significantly, seeing energy subsidy (fuel and electricity) as economic waste must be a product of ignorance or deliberate distortion. Energy is foundational to economic growth. Any action to make it accessible and affordable is a positive economic move. Acute electricity insufficiency in Nigeria has forced many businesses to resort to generators meaning they spend more on running cost. Removal of fuel subsidy amidst epileptic power supply was already a fatal blow, talk more of when subsidy is equally removed from electricity tarrif. This is why nations, including the US and UK, spend huge sums subsiding energy yearly. I am therefore surprised how a lot of us have swallowed the argument that subsidy is wasteful.

After all said and done, I remain convinced that our experience as a nation points more to why subsidies should remain than why they should be removed. Writing about the removal of fuel subsidy in the June 4, 2023 edition of this column, I argued as follows:

“… in the midst of all the narrative that has delegitimised subsidy and projected it as the source of all our woes as a nation, I am persuaded to look at the issues differently… Removal of petrol subsidy no doubt will free up resources that can be invested in infrastructure and other sectors, but then experience does not give one sufficient confidence to be optimistic. Ours isn’t a nation that has shown prudence and rectitude in managing resources whether in times of plenty or in times of scarcity. Over the years the greed of the power elite (politicians and other public officials) tended to heighten as the nation’s oil wealth increased such that while pioneer leaders like Zik and Ahmadu Bello died without building mansions anywhere, a common local government chairman in today’s era of petrol-dollars may be able to boast of owning an estate in Dubai. It is only instructive, therefore, that the government headed by Zik and co achieved so much with no oil wealth…

“So, having plundered our wealth in the time of plenty, our political class will be struggling in vain to convince a doubting Thomas like me that bringing back the days of plenty through removal of subsidy will automatically inaugurate our much-dreamt-about economic eldorado. They will have to explain to me why nothing has changed (except worsening of hardship) since the government started partial subsidy removal beginning in 2001 under Obasanjo. These gradual steps have since resulted in the total removal of subsidy on kerosene and diesel. The prices of the two products have since skyrocketed meaning that the citizens have been paying the money the government would have spent on subsidising these products. So what improvement can the government point to as justification for the resources saved from this deregulation? What we have rather is more burden on the citizenry who in addition to paying more on kerosene and diesel still have to endure the familiar woes of darkness, bad roads, insecurity and hunger.

“Thus, contrary to the impression being created, our problem in this country is not that the government does not have sufficient money to work with, rather it is that it does not know how to use money when it sees it. So our current economic dilemma, where the government has been crying that the nation is broke, is not the cause of our sickness but a symptom of the sickness. This sickness, indeed a very crippling one, is nothing but the perennial weakness of institutions which has not only rendered them incapable of checking greed, financial recklessness, nepotism, and indolence but has in fact turned them into the very instigators of these ills.”

Ten months after I wrote the above article, a lot has happened by way of the disastrous effect of removal of subsidy on premium motor spirit (PMS). The usual promise that money saved from subsidy will be invested in making life better for our people is once again proving to be a mirage. Rather, what we have been experiencing is more pain. Cost of education is rising. Public universities have been increasing school fees as education subsidy continues to be withdrawn. Where do we go from here?

Back to hike in electricity tarrif. While many are justifiably lamenting the policy, the most important source of pain for the citizenry as far as electricity is concerned is poor supply. This is why most individuals and businesses spend much more than they should have spent daily to survive. For instance, one who spent ₦5, 000 on electricity bills monthly may, under the new tarrif regime, now spend about ₦17, 000. However, the ₦12, 000 increase is nothing compared to what an average person spends on fuelling their generator monthly. For instance, since the beginning of this year when power supply has come so low, I have been spending an average of ₦2, 000 daily fuelling my generator to sustain my work and preserve edibles in my refrigerator. This amounts to an average of ₦60, 000 monthly, whereas before 2024 when my area used to have more regular electricity, I spent only about ₦10, 000 or less on my generator and about ₦4, 000 or less on electricity bill monthly. Even with the 240 percent increase in tarrif, I would still have been spending just about ₦9, 000 on bill had electricity supply remained as regular as then. Now, imagine if supply becomes 24 hours a day, my spending on fuel would go completely, meaning I spend even less on energy generally.

I have a barber friend who spend between ₦3, 000 and ₦5, 000 on fuel to keep his shop running for 12 hours a day, depending on how steady power supply is. Therefore, to operate for 30 days in a month, he is spending between ₦90, 000 and ₦150, 000 on fuel alone. Of course, he also spends on electricity bill. Assuming this barber would have 12 hours of power supply from EEDC to power his two clippers, fans, towel warmer, and bulbs, he, at the previous rate, would be spending something in the region of ₦10, 000 monthly as electricity bill on prepaid arrangement. At the current rate after the 240 percent increment, he would be spending about ₦34, 000 monthly. This is a far cry from the₦90, 000 to ₦150, 000 he has been spending fuelling his generator within the same period of time.

Without regular power supply, increment in tarrif will always amount to further shortchanging the people. Businesses will spend more, further stretching their finances. But with regular electricity, the people will have a much fairer deal. If power supply will not improve, let the subsidy remain so that the poor can breathe.

Henry Chigozie Duru, PhD, teaches journalism and mass communication at Nnamdi Azikiwe University, Awka, Nigeria.