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Increasing price hikes and worsening hardship

By Luke Onyekakeyah
08 September 2020   |   3:18 am
The penchant for government to ignore the feelings of the public each time it does something that people don’t like reminds me of the era of military dictatorship when the khaki boys did whatever they liked, whether or not the people liked it. Dictatorship is government by force. It is the form of government practiced…

The penchant for government to ignore the feelings of the public each time it does something that people don’t like reminds me of the era of military dictatorship when the khaki boys did whatever they liked, whether or not the people liked it.

Dictatorship is government by force. It is the form of government practiced by military juntas, who have no mandate to rule. Being an imposed government, the juntas use brute force, coercion, and compulsion to achieve their selfish objective. No one challenges or opposes the dictator without paying dearly for it.

But that is not what democracy is all about. Democracy is built around people. In a democracy, the leader does not impose his whims and caprices on the people. He is elected by the people as their representative and so is obliged to do what the people want.

The Greeks, who developed the concept of democracy and constitution, built it around the people. “Government of the people by the people and for the people”. Democracy is built around people. Without the people’s interest in directing the programs and policies of the government, the system becomes something else other than democracy.

The above remarks are warranted against the backdrop of the indiscriminate hikes in electricity tariff, petrol, and other consumables. The odds are many. First, is the fact that electricity is epileptic in the country and yet the citizenry is forced to pay electric bills they did not consume! Second is the worsening economic hardship and poverty among the people, compounded by the mass sack of workers in the wake of the COVID-19 pandemic which effectively robs them of income and ability to pay the new tariffs. Developed societies give unemployment benefits to citizens with no job to cushion economic hardship but such doesn’t exist here.

Third is the fact that the government is increasing the prices of too many things at the same time. I will come back to that. It is not only the electricity tariff that is being increased at the moment, within the past year or so, but there has also been an increase in the price of many goods and services. Millions of people have been put in severe financial stress. What is the fate of someone who has no job, no visible source of income, has a family to cater for, and yet is daily bombarded with hiked bills of services not provided? Is it surprising that destitution, insanity, robbery, kidnapping, and other social ills are on the rise!

Now, back to the many price hikes imposed on the populace. Starting with the electricity tariff hike, in the past weeks, the government announced an upward review of electricity tariff as well as a hike in the pump price of petrol from N148 to N162/litre, the latest in the series of hikes in so short a time. The Manufacturers Association of Nigeria (MAN), among other stakeholders, including the Nigeria Labor Congress (NLC), the Trade Union Congress (TUC) and a host of other Nigerians are opposed to it, on the ground that there is no electricity so to say. It is illegal, therefore, for the government to bill Nigerians for electricity not consumed.

Since January this year, I can count how many times we have had electricity for about 5 hours at a stretch. It has been total darkness, which has made life unbearable. All household gadgets—refrigerator, freezer, electric cooker, etc, are completely useless without a generating set.

Whereas, the Nigerian Electricity Regulatory Commission (NERC), appear to justify the hike as necessary to “protect the interest of investors”, what Nigerians are asking is why it is difficult to provide the electricity before increasing the price?

Why is it that since 1999, when this hoodwink started, there has been no improvement, no change in the electricity situation? Why is the situation getting worse on a daily basis rather than improving, despite all the assurances, town hall meetings, and declarations that have been made by past and present managers of the electricity sector? What actually is happening? Can Nigerians be told the truth for once? No amount of explanations, excuses, nice talks, declarations, and propaganda will assuage Nigerians on this issue of national darkness. Nigerians want light as a precondition for paying the increased tariff.

Those who had used the competition in the telecom sector to buttress their argument for an increase in electricity tariff are not being honest. Nigerians did not pay a kobo to the government or any telecom company on the expectation that better telephone services were coming. The companies came with their services first. They provided the infrastructure needed for their operations. Nigerians did not contribute. It was after they had put up the infrastructure that they floated their services that they began to charge Nigerians. Nobody complained about the high price so long as the services were there.

It was the overwhelming patronage by Nigerians that later attracted other investors to the sector. The competition among the telecom providers eventually brought the price of mobile telephony down. The result is that the number of telephone lines in the country ballooned from about 700,000 in 1999 to more than 2 million at present. With the mandatory registration of phone lines, the number must be over 2 million. That is a natural economic pathway that has placed Nigeria among countries with wide telephone coverage. Incidentally, no sooner had the telecom companies come did NITEL, the national pioneer telecom company died.

Based on the foregoing, why must Nigerians pay high electricity tariff prior to investment in the power sector? This is the fundamental question that has not been answered. Where else has this model been applied? The whole idea of paying for services not provided is confounding. It also defies basic economic principles regarding the provision of public goods.

Considering the high cost and lag time needed to put a modern electricity power plant in place, to what extent would the tariff paid by Nigerians (assuming everyone pays as at when due), afford the investors the financial muscle they need to invest in the sector? What happens if many refuse to pay this tariff due to public frustration? Will it mark the end of investment in the sector? What is the expected amount to be collected from weary and angry consumers?

Experience has shown that for varied reasons, many electricity consumers don’t pay their bills. The problem is worse with public organizations that are known to owe electric bills running into billions. Even when the line is disconnected, the consumers bribe the field staffers to reconnect the line without the payment. How feasible is it to base the expected improvement in electricity supply on the payment of the new tariff? There is no way that objective would be achieved when millions of Nigerians are already frustrated and would be reluctant to pay any new electric bill that is not predicated on providing light first.

The way out is for GENCOs and DISCOs to invest in the new electricity reform programme first. One basic economic principle states that “When the market fails to provide certain goods and services, there is a need for government intervention”. The Nigerian electricity market has failed in all ramifications to provide services. The seller has nothing to sell and the buyers (electricity consumers) equally have nothing to buy. That is why the sector has been in jeopardy.

I don’t know how any person in his right senses would be thinking that the solution to this failure lies in hiking electricity tariff every now and then to be paid by frustrated consumers. If the previous increases did not make any difference, how would the present increase make a difference?

How much is expected from the new tariff on an annual basis vis-à-vis the projected expenditure in the sector? There should be such calculation, which should tally with the projected investment. Otherwise, the whole thing would be senseless.

I have tried to analyze the electricity issue. But that is not all. Nigerians are also being stressed to pay the hiked fuel price, rising food cost, increased transportation cost, increased house rent, increased school fees, and cashless policy regime costs. Millions of people expected to pay all these are unemployed. Many have been retrenched or are facing the sack. It is more of a hopeless situation. Can the government and its agencies show some modicum of understanding to the plight of suffering Nigerians by doing away with policies that inflict nothing but hardship?