Politically speaking, market dynamics ought to determine adjustments in the price of goods and services but the element of timing is of utmost significance to avoid unintended consequences. If an economic decision is right but taken at the wrong time, the people will be exposed to unnecessary and avoidable hardship that could lead to socio-political protests and agitations across the land. 

This explains why experts and analysts have spoken against the federal government’s plan to increase electricity tariff by 40% in July, 2023 as a result of the economic policy of the government to float the naira and eliminate the multiple exchange rate system, which coupled with inflation is affecting the Multi-Year Tariff Order (MYTO). The MYTO methodology is an accounting framework used by the Nigerian Electricity Regulatory Commission (NERC) to determine all industry’s costs before arriving at a tariff structure.  

Judging by the below par performance in the sector in terms of giving Nigerians constant and steady power supply, the decision to review electricity tariff in July, 2023 is economically right but politically inauspicious as it is a contradiction to increase tariff in the face of poor power supply and the harsh effects of subsidy removal on Premium Motor Spirit (PMS) and inflation that have culminated in increased cost of operations to households and businesses.

The industry should start to realize that customers are migrating to alternatives such as renewable sources of energy as the rapid spread of solar system is real! If indiscriminate price increase without commensurate improvement in service delivery becomes the norm, there will be consumer resistance and a large chunk of customers will exit public power supply and embrace available alternatives.

The truth is that if a scientific study is carried out, it will show that most customers who have the means to install Inverter systems to take care of their energy needs are already rejecting public power supply because in addition to the erratic nature of the service, customers also grapple with poor quality of power supply that is not favorable to the requirements of commercial and industrial customers whose installed machines have acceptable and preset values at which they operate.

What should be of paramount importance to the producers and suppliers of electricity for now should be how to introduce better efficiency by improving service delivery to their clients through investing in improving and expanding their current fragile networks.

At the downstream level, the existing 11kV distribution lines are so weak that most customers prefer to be connected to the more reliable 33kV lines.

On their part, the transmission service provider should invest in increasing their wheeling capacity and making their grid more robust to be able to better withstand stress while the GENCOs should resuscitate some of their faulty machines and firm up their gas supply agreements so as to have more fuel to operate their generators.

Last but not the least, the federal government should continue with its ongoing investment and reforms in the sector to make it more attractive to investors who will be willing to inject their money to improve the sector. The sub-nationals should take advantage of the recently-passed bill that now allows them to be active players in the sector that was hitherto on the exclusive list by creating the enabling environment for investors to be attracted.

Although, it may seem to be a chicken and egg argument, when there are remarkable improvement in the sector in form of increased capacity and availability, upward price adjustments will become seamless and welcomed by all!