OPSN: A great number of private enterprises using electricity set to shut down due to hike
The Organised Private Sector (OPSN) has revealed that over 65 percent of private businesses, especially manufacturing concerns and Secondary Market Intervention Sales (SMIs), may be forced to close down on the back of the high electricity tariff.
In a statement seen by BusinessDay, the organisation said that the increase is coming on the heels of macroeconomic instability, infrastructure deficits, as well as other supply-side constraints limiting the performance of the productive sector.
“It (the new tariff) will have negative trickle-down effects and certainly impoverish Nigerians. The unwarranted increase will worsen the upward swing in inflation, aggravate the pressure on the disposable income of the average Nigerian, and lead to the closure of many private businesses. The cumulative effect will be an escalation of the current high level of unemployment and insecurity in the country,” OPSN said.
Calls for suspension of N225/kWh for Band A feeders
According to the organisation, with the new tariff of N225 per kilowatt-hour (kWh), Nigeria now ranks third after Germany and the UK on the list of countries with high electricity costs.
“What is most worrisome with the Nigerian case is that the electricity to be supplied is inadequate.”
Meanwhile, OPSN said that the astronomical increase is against the MYTO Order referenced NERC/2023/05, which valued the cost-reflective tariff at N114.8/Kwh (determined using the exchange rate of N919.39/$1).
“It also does not reflect the current exchange rate reality that has seen the Naira appreciated by 62.95 percent over the dollar in the last month,” it said.
The OPSN comprises top Business Membership Organisations, the Manufacturers Association of Nigeria, the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture, the Nigeria Employers’ Consultative Association, the Nigerian Association of Small-Scale Industrialists, and the Nigerian Association of Small and Medium Enterprises, representing more than five million businesses in Nigeria.
Following the projection of over 65 per cent shutdown of private businesses, the OPSN has called for the suspension of the implementation of the new tariff of N225/kWh for Band A feeders.
“This will enable all stakeholders to have meaningful dialogue around the process and methodology of determining electricity tariffs as well as jointly agreeing on the transparent mechanism required for tariff setting.
“In consideration of the above and from compelling primary data and submissions from member companies, the OPSN is constrained to state that the more than 200 percent increase in electricity tariff at this difficult time is inimical to the survival of our businesses and would lead to unprecedented downturn in the productive sector of the economy,” the organisation.
