40% tariff hike: Nigerians may pay N1000 to buy 10units of electricity by July 1

Three weeks into the new administration of President Bola Ahmed Tinubu, Nigerians are becoming increasingly concerned about the array of policies being implemented, particularly the plan to increase electricity tariff by 40% in July.

The swift pace of President Ahmed Bola Tinubu’s actions, including the removal of fuel subsidies, has raised fears that the government may be planning to end subsidies across various sectors, including electricity.

This latest development has triggered a wave of emotions, as more Nigerians, already grappling with the removal of fuel subsidies, now push back against the news of an electricity tariff hike.

Reactions on Twitter have been intense, with users expressing their concerns about the long-term impact of the tariff increase on the economy and the livelihoods of the majority.

Twitter reactions

Ever since the announcement was made, the social media platform, Twitter has been buzzing with commentaries on the long-term impact the tariff hike will pose on the economy and the sustainability of living standards for the majority.

About the matter at hand, this is what some Nigerians had to say on Twitter.

A Twitter user, Mark Nathan highlighted the rollout of several policies without complementary efforts to ease the residual impact on the citizens.

• “Mrloanbreatheprices Ahmed Tinubu three weeks in office: – Subsidy removal with ZERO plan to cushion the ripple effect. – Student loans that the poor can’t access. – 7.5% VAT on fuel with ZERO subsidy. – 40% tariff hike in electricity that we rarely used. Welcome to a new dispensation”

According to Jaydon, all the policies implemented by President Tinubu’s administration seem to focus on extracting more funds for the government without sufficient consideration for the populace.

• “Fuel subsidy removed: More money for FG Electricity subsidy removed: More money for FG 7.5% VAT on fuel: More money for FG Tertiary tuition fees introduced: More money for FG No cost of governance reduction: More money for FG No minimum wage increase: More money for FG “ https://twitter.com/Jaydon225/status/1670722151098335232

 Morris Monye, while making a comparison of the electricity tariff under the administration of Nigeria’s last two former presidents, implied that the effect of the hike will be dire for citizens.

• “Electricity tariff Under GEJ, 1,000 naira = 64 units Under Buhari, 1,000 naira = 16 units Under BAT, (From July 1st), 1,000 naira = 10 units or less”

Another Twitter user, Hamma, thinks that on the premise of the increase, energy theft will be on the rise due to the prevailing poverty rate in the country.

• Then there will be a lot of energy theft. Electricity is like the air we breathe and when denied but available it will be sought even through crooked means. You cannot charge Nigerians international price when wages in Nigeria are not international”

 In collaboration with the above idea, Ada Campbell notes that this increase could be the last straw for many individuals in the nation particularly those who struggle with income generation. She said,

• “A 40% electricity tariff hike is the final nail in the coffin. Incomes do not reflect these price hikes.” https://twitter.com/Adacampbell/status/1670724942244065280

 Back story

At the moment, the federal government coughs out a monthly subsidy of N50 billion on electricity. However, with the initial removal of subsidy on petrol and motor spirit, and the free-floating of the naira, the sheer price standard of the Nigerian Electricity Regulatory Commission (NERC) 2022 Multi-Year Tariff Order (MYTO) has already been tampered with.

This is because, before this time, the tariff for electricity had always been determined by the official exchange rate. A breakdown shows that in 2015, the tariff stood at N198.97/$, which sold at N25 per megawatt bought.

By 2022 when it reached N441.78/$ the tariff was N60 per megawatt. All of this was factoring in inflation too. Now that inflation has peaked at 22.1% chances are high that the rates will be adjusted too.