The Manufacturers Association of Nigeria (MAN) has voiced strong opposition to the current electricity banding system implemented by the Federal Government, characterizing it as discriminatory and unjust. This system categorizes electricity consumers into Bands A through E, each band receiving a different allocated number of electricity supply hours per day and subjected to varying tariff rates. Band A consumers enjoy a daily supply of 20 hours, while Band B receives 16 hours. Band C is allocated 12 hours, Band D receives a meager 8 hours, and Band E consumers are left with a mere 4 hours of daily power supply. MAN argues that this system fails to consider crucial socio-economic factors such as income levels, household activities, and the overall capacity of residents before assigning them to a specific band, thus leading to an unfair distribution of electricity access and cost burdens.
MAN’s Director-General, Segun Ajayi-Kadri, emphasizes that the current banding system lacks a scientific basis and relies on subjective criteria, potentially leading to inaccurate and unfair classifications. He proposes a shift towards a consumption-based tariff system, arguing that it presents a more logical and equitable approach. Under this proposed system, electricity charges would be directly proportional to the amount of electricity consumed by each user. This would ensure that those with lower consumption, indicative of potentially lower income levels, are not unfairly burdened with high tariffs, while those with higher consumption, likely representing greater capacity to pay, would contribute proportionately more to the cost of electricity. This transparent and usage-based system, according to MAN, would replace the arbitrary nature of the current banding system with a fairer and more economically sound approach.
Ajayi-Kadri further argues that the current high electricity tariffs, compounded by the flawed banding system, are imposing significant hardship on both households and industries. He emphasizes the need for the government to consider the detrimental impact of these tariffs on businesses, particularly in light of Nigeria’s ambitious economic growth targets for 2025. He calls for a review and adjustment of the tariff structure to provide some relief to industries, recognizing their crucial role in driving economic development. Prioritizing electricity supply to sectors vital for economic growth is paramount, according to Ajayi-Kadri, to ensure sustainable and inclusive economic progress.
MAN stresses the interconnectedness between reliable and affordable electricity supply and the overall health of the Nigerian economy. The current system, with its unequal distribution and potentially exorbitant tariffs, poses a significant obstacle to economic growth and development. The association advocates for a more strategic approach to electricity pricing and distribution, one that supports both consumers and businesses, promoting economic activity and improving the standard of living. The call for a fairer, more transparent, and consumption-based tariff system represents a crucial step towards addressing the current challenges in the Nigerian power sector and unlocking the nation’s economic potential.
The association’s concerns highlight the growing dissatisfaction among the public regarding the performance of electricity distribution companies (DisCos) and their inability to meet the stipulated power supply targets. This dissatisfaction is exacerbated by the high tariffs, which many consider to be disproportionate to the quality and reliability of the electricity service provided. The band system, according to MAN, further complicates this issue by imposing varying levels of service and cost based on arbitrary classifications rather than actual consumption. This creates a situation where some consumers pay more for less electricity, while others potentially enjoy more power at a lower cost, simply based on their assigned band, irrespective of their actual usage.
MAN’s advocacy for a consumption-based tariff system represents a call for a more equitable and efficient approach to electricity pricing and distribution in Nigeria. This system, they argue, would ensure that consumers pay only for the electricity they consume, fostering a sense of fairness and promoting responsible energy usage. Furthermore, it would provide a more accurate reflection of the actual cost of providing electricity, potentially incentivizing investments in infrastructure upgrades and improvements in service delivery. By aligning electricity costs with actual consumption, Nigeria could move towards a more sustainable and economically viable power sector, benefiting both consumers and the broader economy.
