₦airaland Forum

Nigerians will pay much higher tariff for power in 2021, going by promises made by the Federal Government to the International Monetary Fund while seeking the $3.4bn emergency financial assistance recently approved for Nigeria.

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The Executive Board of the IMF approved the Rapid Financing Instrument, which the Federal Government plans to use to address the economic impact of the COVID-19 pandemic in the country, on April 28.

A Letter of Intent, jointly signed by the Finance Minister, Zainab Ahmed, and the Governor of Central Bank of Nigeria, Godwin Emefiele, and addressed to the IMF Managing Director, Kristalina Georgieva, indicated that the Federal Government made a number of promises to the fund in order to secure the financial assistance.


One of the promises, or commitments, which the government made in a bid to assure the executive board of the IMF of its readiness to reposition the Nigerian economy after the pandemic, is that Nigerians would pay full cost-reflective tariff for power in 2021.

The Federal Government also told the IMF it intends to cap electricity tariff shortfalls to N380bn in 2020.

“We are also advancing in our power sector reforms – with technical assistance and financial support from the World Bank – including through capping electricity tariff shortfalls this year to N380bn and moving to full cost-reflective tariffs in 2021,” the Federal Government said in the letter.


On January 4, the Nigerian Electricity Regulatory Commission approved an increase in electricity tariff for the 11 electricity distribution companies in Nigeria.

It, however, could not implement the tariff increase after labour unions, lawmakers and other Nigerians kicked against the move, which would have commenced on April 1, 2020.

Although the NERC-reviewed tariff was not cost-reflective enough as required by power distributors, it showed that Nigerians would definitely pay more for electricity if it had been implemented.

This, therefore, implies that once the government enforces the payment of full cost-reflective tariff, in line with the promise to the IMF, power users might pay far higher than what was projected in NERC’s recent tariff review.

The commission had explained that its directive on the January 2020 tariff regime for different Discos superseded the earlier one issued on the subject matter.

According to details of the review published by the commission in January, for the Abuja Electricity Distribution Company, residential customers in R3 category who were paying N27.20 per unit would have been paying N47.09, had the regime started on April 1, 2020.

The new rates were, however, put on hold after customers kicked vehemently against the development.

But going by the Federal Government’s promise to the IMF, an implementation of cost-reflective tariffs in 2021 means that Nigerians would pay even much higher for power than the rates which NERC had planned to charge from April 1.

Also, in the Letter of Intent, which was dated April 21, the Federal Government also hinted at further increment in Value Added Tax as part of plan to increase its revenue to 15 per cent of Gross Domestic Product.

The planned revenue drive also includes hike of excise fees and removal of tax exemptions.

“First and foremost, we will revert to our government’s planned medium-term fiscal consolidation path – which includes increasing revenue to 15 per cent of GDP through further VAT reforms, rise in excises, and removal of tax exemptions – once the crisis passes,” the letter said.


The Federal Government also assured the IMF that it was working to reduce its budget deficit to under three per cent of GDP in line with the Fiscal Responsibility Act.

The Federal Government also assured the fund that it was committed to eliminating recourse to central bank financing of budget deficits by 2025.

https://punchng.com/nigeriansll-pay-higher-electricity-tariffs-fg-promises-imf/

Lalasticlala Mynd44 OAM4J

It's only in Nigeria the government always make life harder for the citizens

The funny thing is, they didn't make any promises to improve performance. The only improvement of performance you will see in 2021 will be audio.

Coborona:
It's only in Nigeria the government always make life harder for the citizens

Let me understand dis....we borrowed money from.IMF and the US gave us abacha loot worth 311million dollars.....add that to the 4.3billion IMF gave.....do d maths....dis guys at d head of affair will loot us dry....God help us

May God punish Buhari and his Yoruba muslim supporters

Both the ones that voted for them and those who didn't will suffer the hardship together. Am getting inverter. Make dem come comot dem wire from my house

When IMF borrows a country money, they attach conditions to it. It includes policy changes, which in the long run is detrimental to the development of the country. Those policies Inflict hardship on citizens of the borrowing country and make them poorer.

A reason why Africa and countries in the Caribbean/Latin America, are not witnessing any meaningful development. Their citizens are poor, while they remain indebted.

Our leaders are bereft of Indigenous ideas and solutions, they are daft and empty. They care only for their stomach and consumption. Even the few leaders that have solutions to their country’s solution are either killed, denied access to power or blackmailed and intimidated to accept western/(IMF) conditions and policies.


Listen to this message from Nnamdi Kanu as he summarized the reasons for the backwardness of a Blackman


https://www.youtube.com/watch?v=xEYdQJBehwY