The Manufacturers Association of Nigeria (MAN) has expressed deep concern over the recent hike in electricity tariffs, which has led to the closure of over 300 companies and the loss of 380,000 jobs in the past two months.

Senator Ahmed Abdulkadir, speaking on behalf of MAN at an investigative hearing in Abuja, noted that electricity-related expenses constitute about 40% of production overheads for manufacturing companies. The hearing was organized by the Joint Committees on Power, Commerce, National Planning & Economic Development, and Delegated Legislation.

Abdulkadir highlighted the urgent need for the government to address rising insecurity and the high cost of doing business, which could lead to further job losses. He mentioned that one company, which previously employed about 360,000 workers, has reduced its workforce to about 5,000 due to the current economic situation.

MAN is aware of an initial 40% increase in electricity tariffs approved in 2023 but not the more recent, dramatic increase of over 200%, which affects 15% of the Nigerian Electricity Regulatory Commission’s (NERC) customers, including major economic stakeholders.

Contrary to NERC’s position, Abdulkadir alleged that the supplementary order issued on April 3, 2024, which increased the electricity tariff rate from N68 to N225 per kWh, was not properly communicated to the public. He also claimed that electricity distribution companies (Discos) failed to comply with guidelines for consumer consultation before applying for the tariff increase.

Minister of Power, Mr. Adebayo Adelabu, explained that the introduction of Band A, which has a higher tariff, has reduced electricity subsidies to N1 trillion from approximately N3 trillion. Without the tariff increase, the subsidy would have surged to about N3 trillion, which the government could not afford.

NERC’s representative, Mr. Sanusi Garuba, noted that energy invoices submitted by Discos totaled N260 billion per month, while generation companies (Gencos) pay N20 billion. The 2023 fiscal year closed with an electricity subsidy of N460 billion due to Gencos’ refusal to pay for gas supply.

Garuba also emphasized that the economic policy changes announced by the current administration in May 2023, including the removal of fuel subsidies and the hike in foreign exchange, have significantly impacted the electricity tariff hike.

House Speaker Tajudeen Abbas, represented by his Deputy, Hon. Benjamin Kalu, acknowledged the widespread opposition to the tariff increase. Many fear that the higher utility bills will exacerbate economic hardships and increase operational costs for businesses, leading to higher prices for goods and services.

Chairman of the House Committee on Power, Hon. Victor Nwokolo, noted that the special committee was set up to investigate the circumstances and rationale behind the recent tariff review by NERC. Complaints have been received about both the process and substance of NERC’s regulatory actions, including a lack of consultation and failure to deliver on the promised 20 hours of electricity supply per day for Band A customers.