Representatives of Nigeria’s Organised Private Sector (OPS), namely: Lagos Chamber of Commerce and Industry (LCCI), the Manufacturers Association of Nigeria (MAN), Nigeria Employers Consultative Association (NECA) and the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), have kicked against any move that would lead to the reversal of the new electricity tariffs, and fuel price announced by the federal government as part of its measures to deregulate the power and energy sectors of the Nigerian economy.
The OPS also commended the Nigerian Labour Congress (NLC) and the Trade Unions Congress (TUC) for suspending by two weeks the labour strike they planned against the increase in tariffs in order to enable negations and peaceful settlement of the conflicts without disrupting economic activities.
It also advised the labour unions to negotiate and secure palliative that would cushion the temporary effects of the deregulation policies on the masses.
Following the threat by the organised labour to organise a mass action, the federal government and the labour unions had resolved to suspend the implementation of the new electricity tariffs for two weeks to enable a committee set up by both parties to study the issue.
After a marathon meeting that ended in the early morning of yesterday, the organised labour suspended its planned nationwide industrial action for two weeks.
To address the workers’ grievances against deregulation, it was agreed that the NNPC would expedite action on the rehabilitation of the nation’s four refineries located in Port Harcourt, Warri and Kaduna and to achieve 50 per cent completion for Port Harcourt by December 2021, while timelines and delivery for Warri and Kaduna will be established by an inclusive steering committee.
On the issue of electricity tariffs reforms, the parties agreed to set up a technical committee comprising Ministries, Departments, Agencies (MDAs), NLC and TUC, which will work for the duration of two weeks effective from Monday (yesterday), September 28.
The Director-General of NECA, Mr. Timothy Olawale, yesterday, in a press statement stated that the Nigerian government would risk rolling back the gains of the recent reforms in the power sector and would further miss the opportunity to build on a credible electricity market for investors if it reverted to a subsidised electricity market.
Olawale said: “We believe that there is no point reversing the decision on the service-reflective tariff and subsidising the electricity market since it would deter investors and drag Nigeria’s push to enforce a credible electricity market. This would reflect negatively on the economy.
“The federal government may not recover from the cost of reverting to the former tariff rate as it would suffer a huge credibility deficit. The issue of taking one step forward and one step backwards in the power sector will keep pushing away the credible electricity market we are seeking to build.
“Nigeria’s central bank and other industry stakeholders comprising the Nigerian Electricity Regulatory Commission (NERC), the 11 distribution companies (Discos) and others have been leading a progressive charge to drive reform in the power sector. The World Bank has also tied most of its facility support to Nigeria’s power sector, which is in the neighbourhood of $750 million, to credible market reform in the power sector.
“The new electricity tariff will ensure that prices charged by Discos are fair to consumers but sufficient to allow recovery of the efficient cost of operation, including a reasonable return on the capital invested in the business. It is expected to provide the path to transitioning the Nigerian electricity supply industry to the service-based cost-reflective tariff.”
The NECA, however, noted that the call by the labour unions to the federal government that the infrastructural challenge in the sector should be addressed “is both genuine and imperative. A major sore point for consumers generally is the incidence of estimated billing, which has pitched the DISCOS against consumers. It is paramount that pre-paid meters are installed for all consumers to increase the confidence of Nigerians, rather than the current controversial estimated billing.”
While all efforts made by reporters to get the Discos’ Director of Research and Advocacy, Mr. Sunday Oduntan, to comment on the suspension of tariffs, proved abortive as he neither picked his calls nor replied to texts sent to him, a senior official of one of the electricity Distribution Companies (Discos), told THISDAY that the power companies received the news about the suspension with shock, describing it as a setback to the power sector.
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Malam Mele Kyari, has, however, assured labour that NNPC would diligently implement the agreement reached between them and federal government and commended labour leaders for suspending their planned protest.
The Director-General of the LCCI, Dr. Muda Yusuf, told THISDAY that the unions have welcomed the removal of petrol subsidy and only wanted a justification for the recent hike in electricity tariffs.
Yusuf, however, warned that suspending the new tariffs in favour of retaining the subsidies would doom the economy.
He said: “We have seen large negative variances in revenue performance at all levels of government. The capacity to fund critical economic and social infrastructures had waned considerably. If the country continues with the current trend of monstrous and opaque subsidies, it could slip into bankruptcy.”
Speaking in the same vein, the Acting Director-General of MAN, Mr. Ambrose Oruche, commended the labour unions for shelving the strike, which would have been too much for the economy that is just recovering from the COVID-19 lockdown.
Oruche argued that reversing the tariffs would have adverse negative consequences on the economy and also portray the country’s government as unserious before domestic and international investors.
He said: “Reversing the tariffs will mean going backwards. It will also portray Nigeria’s government as unserious for reneging on the implementation of its deregulation policies.
“The government needs to be persistent and I will not support the government to go back on these policies it has mustered the courage to introduce. It is needful to take hard decision at certain points in order to get the economy moving. I believe that the government took this decision for the sake of the economy and the good of the people, especially future generations, because the subsidies are eating into our future income today with nothing to cater for our need tomorrow.”
The MAN, according to him, has been clamouring for the full deregulation of these sectors because the gains far outweighed the temporary discomfort they will cause.
“It may be painful in the short run but I think it is the way to go. Because cost reflective tariffs will encourage more investments as more people get involved in the power and petroleum sectors, which will be more beneficial for the entire citizens of Nigeria.
“We expect the labour unions to seek for palliatives for the people that are worst affected by these policies,” he said.
Similarly, the Director-General of NACCIMA, Ambassador Ayo Olukanni, called for frank discussions on the issues of the new electricity tariffs and other burning issues affecting the economy.
“Whatever steps that can be taken to prevent disruption of the economy, especially as efforts are being made to minimise the negative economic impact of COVID-19, is a step in the right direction. So, we welcome this truce between the government and labour unions,” Olukanni said.
A top official of one of the Discos also told reporters yesterday that the distribution companies received the news of the suspension of the tariffs with shock.
He said the agreement to suspend the new tariffs would scare investors from the power sector, stressing that if the country continues that way, in the next decade Nigeria will remain in darkness.
The official, who pleaded anonymity, since he wasn’t authorised to speak for the power distributors, said the agreement has created confusion because the bills for September are ready.
According to him, there was no official communication from the Nigerian Electricity Regulatory Commission (NERC) on the decision to suspend tariffs for two weeks.
He also bemoaned the decision by labour and the federal government to allow only one representative to represent the 11 Discos in the technical committee set up by the government and labour, insisting that the Discos’ representative will not only be shut out, but his or her voice will be drowned out during meetings.
He lamented that no form of consultation took place before the decision to suspend the new tariffs, stressing that the move had taken the entire industry “20 steps back,” whereas only one step was taken forward.
He said: “We all have a duty to make this country better. Look at it from this perspective, we are left with just three days in this month, then you say you are suspending (tariffs) for two weeks.
“So, what happens to the bills we are going to collect? Because the thinking of customers now will be that they will get the old bill. Meanwhile, the bill for our customers for September has already been prepared and has gone out based on the new tariff.
“It’s a major setback. Two is the fact that the Discos are yet to get a communication from the regulator asking us to stop the new tariff because we also got a written communication from the NERC to say go ahead. So, the Discos will not act on media reports.”
Kyari: NNPC Will Implement Agreement with Labour
Meanwhile, the Group Managing Director of the NNPC, Kyari, has assured labour that NNPC would diligently implement the agreement reached between the labour leaders and federal government, and commended labour leaders for suspending their planned protest.
“We reached an accord to suspend the planned strike action, great responsibility for both government and Labour, all serving the common good, the beneficial challenge for NNPC, we will follow through diligently,” Kyari tweeted after the meeting.
He added: “Being a former union leader, I understand the difficulties of labour leadership when faced with choices between stark realities and legitimate follower expectations. The leadership chose the pursuit of common good and posterity will vindicate us all for standing with our country.
“NLC and TUC demonstrated absolute faith in our country and showed understanding on the inevitability of petrol deregulation and jointly charted a way forward to secure local refining sufficiency through greater stakeholder inclusiveness and transparency. We will follow through diligently.”
APC Hails FG, Organised Labour on Truce
The All Progressives Congress (APC) has commended the leadership of the NLC and the TUC for suspending the nationwide strike following the successful agreement with the federal government.
The Deputy National Publicity Secretary of the party, Mr. Yekini Nabena, in a statement issued yesterday, said the temporary suspension of the application of the cost-reflective electricity tariffs adjustments by Discos to allow for an all-inclusive and independent review of the power sector operations is evidence of government’s pro-people stance.
According to him, “The welcome and positive development is in line with the proven pro-people stance of the President Muhammadu Buhari-led APC administration which has always put the welfare and the interest of the masses first in policy decisions and implementation. Indeed, the shelved strike is a victory for the Nigerian masses.”
Nabena stressed that to reduce the cost of petrol, the federal government and labour agreed on the urgency to rehabilitate the nation’s refineries and increase local refining capacity so as to reduce the over-dependency on costly importation of refined petroleum products.
APC enumerated the various measures to be taken by the federal government to cushion the effects of the deregulation on the masses.
The party also commended the president for the transmission of the much-awaited Petroleum Industry Bill 2020 to the National Assembly, adding that the PIB would provide the necessary legal framework to the long-sought reforms and ongoing deregulation of the petroleum sector in the country.