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THE PROPOSED SUBSIDY ON ELECTRICITY

By NBF News
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The Federal Government took another step in its bid to increase the cost of electricity by about 100 per cent from January, next year, with a promise to subsidise cost of the product for the urban poor and rural dwellers for three years.

The Minister of Power, Prof. Barth Nnaji, who disclosed the plan while speaking on 'Power Generation, Transmission and Distribution' at the 17th Nigerian Economic Summit, in Abuja, said the subsidy will help cushion the impact of the increase on the identified class of people who cannot afford the new tariffs.

The subsidy is estimated to cost the government N100 billion in 2012. This subsidy plan, notwithstanding, we do not support any plan to increase cost of electricity that does not provide for prior or simultaneous substantial increase in availability of the product. As we have said on a number of occasions, let the people be well served first, then they will not mind paying more for electricity.

This stance is hinged on the need to convince the people that they will not only be paying more for the same legendarily poor service from the power authority.

We fully understand the dilemma of the authorities on the electricity tariff conundrum. The government wants private investors to come into the sector to provide better services that it has failed to render, but they do not want to because of the present low tariff structure in the sector.

The government, therefore, wants the tariffs increased to encourage private investors to come in. This position, reasonable as it sounds, does not take into consideration the restriction of electricity supply to the nation to the Federal Government in the 1999 Constitution (As Amended). Any attempt to delegate this responsibility to the private sector must of necessity be preceded by an amendment of this section of the constitution. Although a process to ensure this is in progress, it is yet to be concluded.

Even without constitutional constrains, it will be patently unjust for the government to burden already beleaguered citizens with higher electricity costs on a forlorn hope that services world improve.

The way out of this riddle is for government to subsidise the cost of electricity services provided by private investors for all, for a limited period, to demonstrate that they can truly provide adequate services.

If regular electricity is made available to the people even for a period as short as three months, they will not mind paying more to sustain the increase in supply.

If tariffs are increased in the absence of prior or simultaneous improved service, it will amount to punishment of the people. It will also be untimely, especially given the plans to remove fuel subsidy and introduce toll gates next year. Motorists are also expected to pay N10,000 for new number plates between next month and September 2012. In addition, the promised implementation of the new minimum wage structure that was to take off some months ago has not begun. How then can government, in all sincerity, justify such high increase in electricity tariffs from next January?

Pushing for this increase at this time, we think the government is trying to bite off more than it can chew. There is a limit to what the people can endure and this administration should be mindful of this. All responsible governments subsidise one service or the other to their citizens, so it will not be out of place to require the government to subsidise electricity for all Nigerians until private investors can demonstrate capacity to guarantee adequate supply.

By that time, the citizens will be more than prepared to pay more to ensure sustainability of the supply. Observable, measurable and significant improvement in power supply will boost industrial productivity in manufacturing companies. Artisans such as barbers, hairdressers, vulcanisers, millers and welders will be able to practice their vocations profitably.

There will be no need to force them before they pay higher electricity tariffs.

Again, the Jonathan administration has not justified this planned increase with measurable improvement in electricity. How many megawatts of electricity, for instance, has this government added to the national grid in the over one year the president has been at the helm of affairs? How many new electricity projects have been delivered?

Are turbines for electricity projects not now still lying around the ports? There is need for the government to demonstrate stronger resolve to resolve the electricity debacle. Unilateral increase in electricity tariffs is not the way to do this.