Business
No justification for electricity tariff hike – Stakeholders
NIGERIANS have been thrown into confusion over whose authority supersedes on the issue of electricity tariff increase. No sooner than President Muhammadu Buhari, assured Nigerians that there will be no hike until supply improved significantly, than the Nigerian Electricity Regulatory Commission, NERC, last week declared a new tariff regime effective from November 1.
Stakeholders note that the new tariff is more than 40 percent higher than the current levels and will be the second time in nine months, even as there has been no significant improvement in the electricity supply situation in the country.
While some consumers admit to better supply in some locations, majority however, insist that the situation is even worse than before, as they enjoy the scarce commodity only for a few hours late into the night, when it is really of no use to them.
No justification: Reacting to the development, an advocacy group, Nigerian Electricity Consumers Advocacy, NECAN, said the recent “consultations” on tariff carried out by electricity distribution companies, DISCOS, were a mere trick to justify tariff hike.
According to NECAN President, Mr. Tomi Akingbogun, “We believe NERC is allowing the public to be over billed by allowing the DISCOs justify the increases. Otherwise, how can it be explained NERC allowed a tariff hike of 12.5 to 48 percent in January, and allowing same percent in October of that same year?
“NERC has allowed the DISCOs to take advantage of everyone and had changed the rules at will thereby breaking all the rules. The condition given to them was to ensure that customers are metered before complaining of losses.” He therefore called on the President Buhari to keep his promises to Nigerians and discourage the exploitation by the DISCos.
Costs evaluation: Also commenting, the Director General, Lagos Chambers of Commerce and Industry, LCCI, Mr. Muda Yusuf, said the proposed upward review in electricity tariff at this time is worrisome, as consumers should not be made to pay for inefficiency or corruption costs.
His words: “It is important to evaluate the elements of the current costs especially the integrity of procurement processes and other operational expenditure under the current dispensation. The risk of bloated costs is typically high with such enterprises, especially as they operate in a monopolistic environment.
“Pricing is only one component (although fundamental) in the power reform process. There are other issues such as the gas availability, security of gas infrastructure, adequacy of investment in gas infrastructure, security and adequacy of the transmission lines, and the general framework to mitigate the risk of investment in the sector.
“The problem of outrageous billing is yet to be addressed. The commitment to the provision of meters for electricity consumers to ensure fair billing is inadequate. A vast majority of consumers still have no meters.
Inadequaciesin billing
Yet this is fundamental to a good relationship between the power firms and their customers. Many consumers feel exploited at this time because of the inadequacies in billing. The contentious fixed charge is still in place. “It is heart rending that the choice of locations of many of the Independent Power Projects, IPPs, was informed more by politics than the economics of power generation.
“Access to a major input in power generation, which is gas, was not sufficiently taken into account. This reality has badly affected the cost profile of the IPP projects. All these are complications and challenges on the path of the power sector productivity,” he maintained.
Breaking the law: According to Section. 76 of the Electric Power Sector Reform Act. MYTO 1.0 states that there will be no increase until 2017, and only 5% will be allowed. DISCOs were given two years to meter all customers. But they refused saying there was no money. Grant was given them, they refused to access it.
Alternatively, customers were asked to fund meter purchase and be refunded from their bills. But for three to four years or more down the line, nothing has been done to that effect. The law does not recognise estimated billing. NERC should stop the practice, but instead it allows it on the excuse that DISCOs must make profit.
Presently, only about 40 percent electricity users are metered. How does NERC want the DISCOs to make profit from the 40% customers captured? This is the question begging for answer if the plan is not to allow them make super profits before metering everyone.
No valid basis for hike: Against this backdrop, the Nigerian Association for Energy Economics, NAEE, condemned attempts by the DISCOs and NERC to increase electricity tariffs, saying that there is no valid and empirical basis for any sort of increase.
Source: Vanguard
Tony Elumelu Entrepreneurs have collectively created 1.5 million jobs and generated $4.2 billion in revenue — Over 2 million Africans lifted out of poverty.
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The Tony Elumelu Foundation is the leading philanthropy empowering a new generation of African entrepreneurs, driving poverty eradication, catalysing job creation across all 54 African countries and ensuring inclusive economic empowerment.
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Business
Federal Government Moves to Slash Sky-High Airfares as Minister Keyamo Exposes Airline Tactics
Federal Government Moves to Slash Sky-High Airfares as Minister Keyamo Exposes Airline Tactics
The Federal Government, through the Minister of Aviation and Aerospace Development, Festus Keyamo, has vowed to tackle the exorbitant cost of air tickets for both domestic and international flights, revealing major efforts to cut costs, enhance airport safety, and address airline pricing manipulations.
Speaking at the Ministerial Press Briefing in Abuja on Thursday, Keyamo exposed a series of economic and policy-based factors that have led to the skyrocketing price of flight tickets, making air travel increasingly unaffordable for Nigerians.
Why Are Airfares So Expensive? The Inside Story
Keyamo broke down the root causes of excessive ticket pricing, which include:
Limited access to affordable aircraft leasing, forcing Nigerian airlines to either lease aircraft at exorbitant rates or buy aircraft outright—a cost that ultimately burdens passengers. Foreign airlines deliberately inflating ticket prices for Nigerian travelers due to fears of trapped funds and currency depreciation. Heavy government-imposed airport taxes, which are among the highest in Africa, further pushing up fares.
Foreign Airlines Caught in the Act? Keyamo Exposes Pricing Tricks
In a shocking revelation, Keyamo unveiled how foreign airlines had been exploiting Nigerian travelers by restricting them to only the highest-priced tickets.
“We called international airlines and asked what they used to do. They said if you want to buy international tickets, you will see business class Z, grade J, different grades, but it’s all the same. One can be N2 million cheaper than the other. Those ones, they opened for countries where they could get their money immediately. But they now opened only the high fare for Nigerian passengers,” he disclosed.
He explained that because foreign airlines feared currency depreciation, they set high fares in anticipation of inflation affecting their trapped funds.
“They said because they were taking into account inflationary rates of the money that will be trapped, they didn’t know when they would get it back. So instead of selling a ticket for N2 million or N3 million, they sold it for N7 million. Meanwhile, Ghana had lower ticket prices,” he added.
Government’s Response: No More Exploitation!
The government, according to Keyamo, is actively engaging foreign airlines to adjust their pricing in line with the recently cleared backlog of trapped funds.
“President Bola Tinubu, being very smart on this, cleared that first. But even after clearing the backlog, they were still enjoying the high fares. So we told them, ‘No, you cannot continue to do this. The excuse is gone. Nigerian passengers must now get fair pricing like other countries.’”
The Nigerian Civil Aviation Authority (NCAA) is leading discussions with these airlines to force a price adjustment, ensuring that Nigerians no longer face inflated airfares.
Airport Taxes: Another Major Culprit
Keyamo acknowledged that Nigeria’s airport taxes are among the highest in Africa, further worsening ticket prices. However, he emphasized that reducing these taxes is not solely within his power, as it requires collaboration with the Ministry of Finance.
“The Nigerian Airspace Management Authority and the Federal Airports Authority of Nigeria are reviewing these charges, but I cannot singlehandedly reduce them. It involves the Minister of Finance,” he clarified.
He stressed that airlines pass these high taxes directly to passengers, further inflating ticket costs.
What Lies Ahead? Promises of Cheaper Flights Soon
Keyamo assured Nigerians that with ongoing government interventions—including negotiations with foreign airlines, new aircraft leasing agreements, and possible tax reductions—airfares will soon become more affordable.
“We are addressing these issues. The results will soon be visible with the Cape Town Convention and the Dublin Conference. The deals are coming in, and we will see the results soon,” he promised.
Final Verdict: Relief in Sight or Another Empty Promise?
While the Federal Government’s efforts signal hope for Nigerian travelers, many remain skeptical about whether these promises will translate into real, affordable ticket prices. Will Keyamo’s intervention finally ground the exploitative pricing system, or will passengers continue to pay the price for policy failures? Nigerians are watching closely.
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