Nigeria: Press zooms in on looming electricity tariff hike as govt raises gas price, others

The report that the increase in gas price by the Nigerian Government on Monday for power generation companies to $2.42 per metric million British thermal unit from the previous rate of $2.18mmbtu may lead to electricity tariff hike is one of the trending stories in Nigerian newspapers on Tuesday.
The Punch reports that the Nigerian Government, on Monday, announced that the new price of natural gas for power generation companies is now $2.42 per metric million British thermal unit, higher than the previous rate of $2.18mmbtu.
Nigeria generates over 70 per cent of its electricity from thermal power plants that are fired by gas. Therefore, the rise in the cost of the commodity may lead to a hike in the tariff payable by power consumers once the Nigerian Electricity Regulatory Commission carries out another tariff review.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority, an agency of the Federal Government, unveiled the new domestic base price and wholesale prices of natural gas for 2024 in an announcement on Monday.
The NMDPRA also pegged the cost of commercial gas at $2.92mmbtu, up from the previous cost of $2.5mmbtu. The announcement was signed by the Chief Executive, NMDPRA, Faro
Recall that the Multi-Year Tariff Order released by NERC in January 2024 for the electricity distribution companies was calculated based on the previous price of natural gas.
Therefore, going by the latest cost of the commodity, there is a high tendency for an upward review of power tariffs, as gas is a major component used in power production.
The newspaper says that despite the persistent epileptic power supply nationwide, revenue generation by electricity distribution companies in Nigeria surged to N1.1trn within the 12 months of 2023, a new report has revealed.
The figure represents an increase of N234.4bn or 28.2 per cent from the N831bn generated by the power firms over a similar period in 2022.
This latest data was disclosed in the electricity report released by the National Bureau of Statistics on Monday.
The latest data came despite the sporadic power grid collapses recorded during the year.
Nigeria’s national power grid collapsed 46 times from 2017 to 2023, a report by the International Energy Agency said in a report.
According to the report, Nigerians endured more nationwide blackouts in 2023, especially on September 14 when the grid collapsed due to a fire on a major transmission line.
Despite the challenges, the distribution companies have continued to smile at the bank, allocating outrageous billing to customers.
The Vanguard newspaper reports that the Manufacturers Association of Nigeria (MAN) has cried out that the continuous adoption of tight monetary policy by the Central Bank of Nigeria (CBN) is worsening the competitiveness of Nigerian products in the global market. Director General of MAN, Segun Ajayi-Kadir, raised the alarm in reaction to the decision of the Monetary Policy Committee (MPC) of CBN to raise the Monetary Policy Rate (MPR) by 200 basis points to 24.75 percent from 22.75 percent at its 294th meeting held on the 25th and 26th of March 2024.
Ajayi-Kadir lamented that over the last 5 years, the manufacturing export value of Nigeria has declined by 166 percent to N778.44 billion in 2023 from N2.07 trillion in 2019.
He added that the exorbitant lending rate has also resulted into a 57.6 percent drop in the share of manufacturing export to non-oil export to 24.8 percent in 2023 from 82.4 percent in 2019.
On the implications of the MPC’s decision on the manufacturing sector, Ajayi-Kadir stated: “In broad terms, the implications of maintaining the same pattern of monetary policy decisions in the last two years is evident in the continuous macroeconomic instability prevalent in the economy with overwhelming impact on the manufacturing sector in Nigeria.
“This is worsened by the multidimensional binding constraints responsible for the lackluster performance of the manufacturing sector in Nigeria.
“The higher cost of doing business will be further exacerbated by the decision of MPC, thereby worsening competitiveness of Nigerian products in the global market, which is evident in the drastic reduction in global demand for these products.
“Data provided by the World Trade Organisation, revealed that South African manufacturing export value was $46 billion, while that of Nigeria was $3 billion in 2022. Clearly, this is over 15 times greater than Nigeria’s manufacturing export value in that year.
“The reduction in global demand for Nigerian products was further buttressed by a National Bureau of Statistics (NBS) report that confirmed that the manufacturing export value of Nigeria plummeted by 166 percent from N2.07 trillion in 2019 to N778.44 billion in 2023.
“In addition, the exorbitant lending rate of over 30 percent has contributed largely to a drop in the share of manufacturing export to non-oil export from 82.4 percent to 24.8 percent in 2019 and 2023 respectively.”
He said while MAN recognizes that the MPC decision is aimed at addressing the economic challenges facing the country particularly the instability in inflation and exchange rates, it is essential for the committee to carefully consider the potential impact of the decisions on manufacturing.
The newspaper says that rail transport recorded an increase of 8.8 per cent, Year-on-Year, YoY to N6.05 billion from N5.56 billion in 2022.
The National Bureau of Statistic (NBS) disclosed this yesterday in its Rail Transport report for the fourth quarter of 2023 (Q4’23).
The report showed that the revenue generated in 2023 comprised N4.42 billion from passengers, N1.07 billion from goods and cargos and N565.84 million from other income receipts.
The data also showed that the number of cargos\goods transported by rail during the period stood at 317,244 while the number of passengers was 2.18 million.
However, the report showed that in Q4’23, the number of passengers fell by 49.7 percent to 672,198.
The NBS said: “In Q4’23, a total of 672,198 passengers travelled via rail system relative to 1,337,108 reported in the corresponding quarter of 2022, indicating a growth rate of -49.73 percent.
“The volume of goods/cargos transported in Q4’23 stood at 119,286 tons compared to 53,136 tons recorded in Q4’22.
“In terms of revenue generation, N1.07 billion was received from passengers during the reference period, showing a decrease of 7.51 percent from the N1.15 billion recorded in the same quarter of the previous year.
“Similarly, N423.22 million was collected from goods/cargos conveyed in Q4’23, up by 169.16 percent from N157.23 million received in Q4’22.
GIK/APA