Power
PHCN workers threaten Nationwide blackout by October 2
LAGOS – The already deplorable power situation in the country may worsen as employees of Power Holding Company of Nigeria, PHCN, have threatened to stop the supply of electricity across the country by October 2 if the federal government goes ahead to handover the assets of the company to private investors today without the conclusion of payment of workers entitlements.
The industrial action follows the expiration of the ultimatum issued by the workers to government to resolve all labour issues ahead of the privatization of PHCN.
In preparation for the industrial action, the workers will today hold a nationwide protest to alert Nigerians of impending shutdown of the power sector on Wednesday.
Speaking under the umbrella of National Union of Electricity Employees (NUEE), the union directed its members to withdraw their services from all PHCN installations immediately after the celebration of the nation’s 53 Independence anniversary.
The union, in a statement issued by its secretary, Joe Ajaero, said the industrial action became necessary in view of government refusal to resolve the outstanding labour issues with the workers.
The union said it was particularly disturbed by the statement credited to the Chairman of National Council on Privatization (NCP), Vice-President Namadi Sambo that government had settled all the labour issues which had impeded the smooth take off of the privatization programme and the handover to private investors.
The union insisted that the vice-president was either being misled or deliberately keen on emasculating the PHCN workers with a view to further impoverishing them.
It challenged the Office of the Vice-President “to mention any person from his constituency – Kaduna State where he served as governor, who has been paid his entitlement, pension and gratuity.”
The union further alleged governments deployment of military personnel to all PHCN facilities stating that the aim was to ostensibly to allow a forceful takeover of the installations without conclusively settling the labour issues.
It noted that the policy of deploying soldiers to PHCN installations to intimidate workers was “definitely misguided and misdirected as they are directed to creating more tension to already tensed polity.”
The statement read: “For clarity, please note that these issues are outstanding: payments of terminal benefits: payment of the terminal benefits is yet to rise up to 50 per cent for the eligible workers. Non-payment of retirement savings fund to Pension Fund Administrators (PFAs): Up till this moment no efforts has been made to commence payment. The PFAs can attest to this fact. Non-remittance of 2 per cent of the union deductions as agreed: No word has been heard from the
BPE/government on remittance of this two person neither has the deductions already made from the paid workers remitted to the unions.”
“Non-payment of retirees who disengaged since 2011: It is absurd and sordid for government not to think of settling these people who laboured over the years in service of this country and get retired meritoriously, while the privatization exercise was on.
Non-regularisation of some of the casuals already identified: With the biometrics done and concluded, it becomes worrisome on the continued delay in regularising the casuals who had been identified based on agreements already entered into. 10 per cent equity shareholding by the workers: In line with the relevant laws, the workers are entitled to 10 per cent Equity Share of the total sale of PHCN. But it appears the government is bent on short changing the workers.”
“The shortfall of terminal benefits from June 2012 till date has not been considered for payment.
“These contending issues cannot be jettisoned by the workers to allow any force to takeover! It behooves us therefore to advise the vice-president and those misguiding him not to toy with the socio-economic lives of PHCN workers, their families and other Nigerians who depend on them for their livelihood. We are set to take our destiny in our hands.
“Because of Independence Day ceremonies, we would be patient to allow for full celebrations.
“However, we hereby urge Nigerians to bear with us if after October 2, the government goes ahead with her illicit handover to the investors and forceful takeover; the implication would be that the workers have technically been asked to withdraw their services and we may not be able to guarantee smooth operations.
Consequently, if after October 2, the Office of the Vice-President fails to correct this misleading information, we shall not guarantee supply of electricity in the country. This is not a threat as our earlier ultimatum has expired.”
– THIS DAY
According to reports, Nigeria’s population may face more challenging times ahead as electricity tariffs are projected to increase by over 40 percent in the near future.
This rise in tariffs could ultimately result in the elimination of all energy subsidies in the country.
Currently, the electricity sector relies on a monthly subsidy of approximately N50 billion, stemming from a shortfall in revenue.
The tariff hike, scheduled to take effect from July 1, will pose another significant test for President Bola Ahmed Tinubu’s administration and its ongoing market reforms.
The government has already taken steps to remove subsidies on Premium Motor Spirit (PMS) and implemented a floating exchange rate for the national currency.
These decisions have added complexity to the price-setting process of the Nigerian Electricity Regulatory Commission (NERC) and its 2022 Multi-Year Tariff Order (MYTO).
Despite power sector players failing to meet the target of supplying a minimum of 5,000 megawatts, even after signing contracts with the Nigerian Electricity Regulatory Commission (NERC), the current Service Based Tariff (SBT) is based on an exchange rate of N441/$ and an inflation rate of 16.97 percent.
According to NERC’s directives in 2015, the average tariff for distribution companies (DisCos) and different categories of end-users was N25 per kilowatt, as per Order 198/2020, which came into effect on September 1, 2020.
However, in the MYTO for 2022, the average tariff increased to N60 per kilowatt across all customer categories, and in the most recent update, it stands at N64 per kilowatt.
The determination of the 2015 tariff relied on a foreign exchange rate of N198.97/$, which increased to N383.80/$ in 2020 and further to N441.78/$ in 2022. In terms of inflation, the 2015 MYTO utilized an 8.3 percent rate, which rose to 12 percent in 2020 and reached 16.97 percent in 2022.
Currently, the inflation rate stands at 22.41 percent, and experts predict it could reach 30 percent by the end of June, considering the floating of the naira and the removal of subsidies on Premium Motor Spirit (PMS).
The tariff determination process takes into account various factors, including the significant metering gap of over seven million, gas prices, losses within the system, and the actual generation capacity. These elements play a role in determining the final tariff.
As anticipated, NERC had projected that the tariff for July 2023 would eliminate subsidies and introduce increases to the previously frozen tariff bands D and E.
These adjustments were intended to raise the bands from N54.59/kilowatt to N62.16 for band D and from N48.37/kilowatt to N61.16 on average. Moreover, the average increase across all bands was expected to reach N67/kilowatt.
However, due to the ongoing floating of the naira and the significant inflationary pressures, it is now projected that the new average tariff will need to be approximately N88/kilowatt for the power sector to recover its costs.
According to energy lawyer Madaki Ameh, the continuous and frequent increases in power tariffs are akin to a form of blackmail against electricity consumers.
Amen said “Indexing the cost of electricity on the dollar is a huge mistake because most of the inputs for electricity supply are local. The DisCos are also holding Nigerians to ransom by failing to increase the supply base, thereby spreading the tariffs across a broader spectrum of consumers to reduce the unit cost of electricity.”
He insisted that as long as there remain many unmetered consumers and many others not connected to the grid at all, the few consumers on the grid would continue to be subjected to unjust tariffs, which are not reflective of the quality of service delivered.
Ameh hoped that the signing into law of the new Electricity Act would mark “the beginning of light at the end of the long tunnel of inefficient and epileptic power supply in Nigeria.”
Segun Ajibola, the former President of the Chartered Institute of Bankers of Nigeria (CIBN) and a professor of Economics at Babcock University, highlighted that there remains a gap between the cost of electricity and the value it provides in exchange.
“Nigerians are still struggling to keep pace with the cost of energy for business and household use. If the electricity tariff goes up as envisaged, the question remains if there will be value for the quantum of electricity so paid for.
“The truth remains that if electricity supply is constant, of the right quantity and quality, the envisaged upward review in the tariff will be gladly absorbed by the populace,” he said.
Lanre Elatuyi, an Electricity Market Analyst, expressed that the recently implemented tariff rate would have significant implications. He emphasized that the devaluation of the Nigerian currency poses a major challenge for companies with dollar-denominated loans to repay.
He said “They will need more naira today to buy a dollar. They need to manage their exposure to foreign exchange risk. Even operators of hydro plants pay their concession fees in dollars. So, wholesale electricity price will be adjusted upward and this will get to the end users’ tariffs too.”
Senator Shehu Sani, a prominent Nigerian lawmaker has accused President Muhammadu Buhari’s government and state governors of secretly selling five power generating plants without disclosing the utilization of the funds received.
He disclosed this in his Twitter handle on Monday.
Senator Sani, known for his outspoken nature and activism expresses his concerns over the alleged undisclosed sale of the power plants.
He claimed that the government, in collaboration with state governors, had carried out the transactions without informing the Nigerian public about the purpose of the funds acquired from the sale.
The post reads “Buhari’s Government in collaboration with the State Governors quietly sold the five power generating plants without telling the country what the money was used for.
The Vice President of Nigeria, Prof. Yemi Osinbajo, has inaugurated the Afam 3 Fast Power 240-megawatt turbine project in Rivers State.
The project, which is a subsidiary of the Transcorp Group located in Oyigbo, on the outskirts of Port Harcourt in the state, was unveiled during a ceremony that took place on Tuesday.
The event, which was attended by several dignitaries, including the Chairman of Transcorp Group, Tony Elumelu, and other top officials, saw the Vice President arriving at the venue in a chopper at exactly 11:35 am.
Upon his arrival, he was escorted into the premises where he officially inaugurated the project.
During his speech at the event, he disclosed that the acquisition of the project was approved by the National Council on Privatisation (NCP) and the acquisition cost was ₦105.3 trillion.
Osinbajo further emphasized that the successful completion of the project is a significant breakthrough in Nigeria’s power sector.
In his address, Osinbajo said, “In 2020, electricity subsidies reached N584 billion, but service-based tariffs have led to a doubling of collection in the Nigeria Electricity Supply Industry from N40 billion in 2020 to N80 billion in the first quarter of 2023.
“If this trajectory continues, the Nigeria Electricity Supply Industry will be able to pay for itself. Our administration has also created programs for off-grid for electrification. Rural Electrification Agency now has the capacity to provide electricity supply on a first-class basis.
“We are on track to electrify all Nigerians in the next decade. However, we will not make progress if our gas supply does not improve. The gas supply challenges are hampering improvements.”
He further lauded General Electric, the National Council on Privatization (NCP), and the host communities for their contribution to the completion of the Afam 3 Fast Power 240-megawatt turbine project in Rivers State.
Osinbajo highlighted that the successful completion of the project will significantly increase the country’s power supply capacity, leading to a better quality of life for Nigerians.
In November 2020, the federal government and the Transcorp Power Consortium signed a share sale and purchase agreement in relation to Afam Power Plc and Afam 3 Fast Power Limited.
The National Council on Privatization approved the privatization of the Afam Power Plant back in August 2017, which triggered a competitive bidding process involving 12 prospective investors.
After careful consideration, Transcorp Power Consortium emerged as the preferred bidder with a combined offer of N105 billion.
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