ORGANISED labor has berated the Federal Government’s resort to international economic indices to determine domestic electricity tariff.
President of the Nigeria Labour Congress NLC, AyubaWabba, reacting to the crisis in the electricity sector, said something was inherently wrong in calculating in United States dollars the cost of the gas used by generation companies (Gencos) in generating electricity in Nigeria.
“The current practice violates the fundamental economic theory of comparative advantage, especially for a developing economy as ours. Related to this is the calculation of ancillary electricity supply logistics in foreign currencies and transferring same to electricity consumers,” he said.
The NLC president said, from the feedback labor has so far got from its representatives in the Technical Committee on the Review of the Electricity Sector, four things stand out in the state of affairs in the electricity sector.
He noted that besides the first on foreign currency, the second was the perversity of offloading the cost of electricity capital accumulation on end consumers.
He said, “It is tenuous and economically unreasonable for electricity generation and distribution companies to upload the cost of acquiring their equipment and operational facilities to electricity consumers.
“This has occurred at two distinct levels so far. The bailout fund to Discos from public coffers was one instance. The other instance was the inbuilding of equipment importation cost into what consumers are paying. The Honourable Minister conceded this much when he talked about a minor adjustment in light of foreign exchange realities.”
Wabba said, in other capitalist climes, investors procure their working capital from profits accruing from their investments, not from uploading and transferring the cost of capital acquisition directly to consumers.
He stated that, if the Nigeria Electricity Regulatory Commission (NERC) continued to use this strange template to design and review its tariff template, then there would be no end to continuous increases in what Nigerians pay for electricity.
The labor leader added that, amid current electricity tariff volatility, the situation of the average consumer would be worsened by the current reliance on alternative sources of energy owing to prevailing instability in the public power supply.
“Third is the opacity in the predisposition of the Nigeria Electricity Regulatory Commission. The feelers from many stakeholders in the electricity supply chain suggest that the regulator in the sector pulls more on the side of the Discos and Gencos rather than on the side of consumers of electricity, both industrial and private users,” he said.
He lamented that the lack of representation of the critical mass of electricity consumers in NERC has aggravated this concern. He stated further that, “From the foregoing, there is no gainsaying the fact of acute adversity imposed by the Power Sector Reform on ordinary Nigerians and the manufacturing sector.
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