By Adedapo Adesanya
The Manufacturing Association of Nigeria (MAN) has lamented the effect of the increase in electricity tariff by the Nigerian Electricity Regulatory Commission (NERC) on business owners in the country, saying the decision was ill-timed considering the nation was in the middle of an economic recession.
This was disclosed by the Chairman of the Edo/Delta branch of the association, Mr Okwara Udensi, in Benin yesterday. He noted that many businesses were still reeling from the hardship caused by the COVID-19 pandemic and the violent aftermath of the #EndSARS campaign.
He said the manufacturing sector was currently being faced with the high cost of production, emphasising that any further increase in electricity tariff would worsen production and purchasing power of consumers.
Mr Udensi said, “The economy is in a bad shape, we are in a recession. So, an increase in electricity tariff will translate to an increase in the cost of goods and services.
“Besides, the purchasing power of the people is low and people will not buy goods produced at a very high cost and this will lead to most SMEs becoming moribund.”
The NERC on Tuesday implemented a new tariff increase that saw the band prices of electricity usage adjusted. The agency in a statement said it made an increase of N2 to N4 per kilowatt hour across the bands.
The commission explained that it increased the fees on the back of the 14.9 per cent inflation rate, foreign exchange of N379.4/$1, available generation capacity, an inflation rate of 1.22 per cent in the United States and the Capital Expenditure (CAPEX) of the power firms.
The tariff saw an increase in the rates payable by all classes of electricity users, meaning this will affect all across the manufacturing class and even small and medium-scale enterprises.
These businesses are already feeling the reduction in purchasing power brought about by the economic contraction in the country.
In the third quarter of last year, Nigeria officially entered another recession as a result of the decline in the nation’s gross domestic product (GDP) in the second quarter (-6.10 per cent) and in the third quarter (-3.62 per cent) of 2020.
Although the federal government has expressed confidence that the current economic crisis would be short-lived, the latest policy has raised a cloud of doubt among Nigerians.
