The African Centre for Innovative Research and Development (AFRI-CIRD) Calls for Consumer-Friendly Measures Amidst Electricity Tariff Hike.
The African Centre for Innovative Research and Development (AFRI-CIRD) says the recent increment in electricity tariffs of consumers in Band A is untimely.
Chief Executive Officer of the research centre, Mohammed Bello in a press release said recent escalation in electricity tariffs has multitudinous implications and is a matter of great concern for both consumers and businesses
The press statement read thus:
The Nigerian government has raised the cost of electricity for Band A consumers, starting April 3, 2024. People affected by this change will now pay N225 per kilowatt-hour, which is a significant increase (240%) from the previous charge of N68/kWh. The African Centre for Innovative Research and Development (AFRI-CIRD) believes this decision is untimely because of the current state of the economy and how this might affect people’s lives. Many Nigerians believe this policy is just another hardship imposed by the government, especially after the removal of fuel subsidies and other people-friendly policies that have worsened people’s livelihoods.
The recent escalation in electricity tariffs has multitudinous implications and is a matter of great concern for both consumers and businesses. The most immediate effect of this increase is the resultant escalation in electricity bills that consumers need to bear. This increase is likely to have a severe impact on low and middle-income households, who are already struggling to make ends meet. As electricity costs escalate, disposable income concomitantly declines, and consumers may be forced to curtail non-essential spending. This, in turn, could adversely affect various sectors of the economy.
To mitigate the increased cost of electricity, consumers may elect to reduce their usage. However, this could have a detrimental impact on comfort and productivity levels in households. Some consumers may opt to invest in energy-efficient appliances or opt for renewable energy sources. However, this is often not possible for low-income households that do not have the resources to make such investments.
Similarly, businesses are adversely affected by the increase in tariffs, as the resulting increase in operating costs could culminate in higher prices for goods and services, directly impacting consumers. The impact of higher tariffs on businesses is likely to be particularly acute for smaller enterprises that operate on tight margins. This could result in job losses and reduced investment in the economy. Regrettably, the burden of heightened tariffs disproportionately affects low-income households, exacerbating existing disparities. It is conceivable that this development could tip more people into poverty or deepen the financial struggles of vulnerable populations. This, in turn, could lead to social unrest and instability. Throughout history, utility tariff increases have often led to public resistance and protests. This is because many consumers perceive these hikes as unjust, particularly when they significantly impact their livelihoods and standard of living. When people cannot afford to pay their utility bills, they may be forced to make difficult choices, such as cutting back on other essential expenses like food, healthcare, or education. This can create significant hardships and even contribute to social unrest.
Nigerians in several ways. For example, it could make it more challenging for people to access essential services like healthcare, education, and transportation. It could also make it more difficult for people to maintain a comfortable living environment at home, particularly during times of extreme weather. Additionally, higher tariffs may limit economic opportunities, making it more challenging for businesses to operate and for individuals to find work.
AFRI-CIRD understands that sustainable revenue generation and infrastructure development are essential for economic growth in Nigeria. However, it is crucial that the government also takes deliberate steps to protect the interests of ordinary citizens.
In light of the recent tariff hikes, AFRI-CIRD recommends that the Nigerian government establish safety nets for vulnerable consumers. This can be done through subsidies or targeted assistance programs that help shield low-income households from the full impact of tariff increases. Moreover, the government should conduct regular reviews of the tariff structures to determine their impact on citizens. Any necessary adjustments should be made based on evidence and should be considerate of economic realities. It is also important that the government promotes consumer education on energy efficiency, bill management, and available support mechanisms. This will help consumers make informed decisions about their electricity usage and manage their bills more effectively.
Finally, AFRI-CIRD believes that consumer advocacy groups, industry associations, and civil society should be involved in policy discussions to ensure a balanced approach when deliberating sensitive policies such as the hike in electricity tariff. This will ensure that the interests of all stakeholders are considered and that policies are developed in a way that benefits everyone.
