COVID-19: Nigerians groan under fuel, electricity hikes
The various hikes in fuel, electricity tariff and cable television subscription prices, among others in the wake of the COVID-19 pandemic
People queue at bus stop
The various hikes in fuel, electricity tariff and cable television subscription prices, among others in the wake of the COVID-19 pandemic further worsened the plight of Nigerians, investigations by our reporters have shown.
Many Nigerians lament that the hikes have affected their cost of living, source of livelihoods and general wellbeing, among other things.
On September 1, the 11 power Distribution Companies (DisCos) implemented the new Service Based Tariff (SBT) order, seeing electricity rates rising by about 100 per cent for consumers, who get over 12 hours of power supply and above.
Though it was suspended for four weeks, on November 1, 2020, the new tariff hike kicked in, raising electricity bills of consumers to an average of over 50 per cent.
On September 2, the Pipelines and Product Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), announced the increment in wholesale pump price of Premium Motor Spirit (PMS) per litre.
The price rose to N151.56 from N148. Petrol price has since increased again to between N168 and N170 per litre as at November 2020, being the fourth increase within the months, mostly at the heart of the COVID-19 pandemic.
The fuel price increases and the electricity rate hike are not the only ones that have happened during this period of coronavirus pandemic.
Nigerians are also groaning under rising food prices, higher cable television subscription prices and increases on Value Added Tax (VAT), and even bank charges.
An instance of high market price of food is the recent food inflation data released by the National Bureau of Statistics (NBS).
The NBS reported that food inflation rose by 16 per cent in August 2020, compared to 15.48 per cent in July 2020. The 16 per cent food inflation in August was higher than the 13.22 per cent headline inflation in August.
“This rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fish, fruits, oils and fats and vegetables,” the NBS explained.
The Federal Government had increased the VAT from 5 per cent to 7.5 per cent, effective from February before the COVID-19 pandemic set in. With this, manufacturers and retailers adjusted prices of goods to reflect the increase in VAT. For instance, MultiChoice Nigeria implemented a price hike on its DSTV and GoTv subscription packages.
The chief executive officer of MultiChoice, John Ugbe, said the company was merely implementing the new VAT rate.
Ugbe said the additional 2.5 per cent increase would not go to MultiChoice but to the Federal Government.
The Federal Competition and Consumer Protection Commission (FCCPC) objected to the price hike, insisting that COVID-19 had impacted negatively on Nigerians.
The director-general of the FCCPC, Babatunde Irukera, a lawyer, told Daily Trust on Sunday that the FCCPC wrote to MultiChoice, seeking clarification and explaining the need not to hike the prices of digital pay telavision at a time of global pandemic, in which many people depend on the media for information on coronavirus disease.
The letter, seen by Daily Trust on Sunday, was dated May 11, 2020 and signed by the commission’s head of legal services, Tam Tamunokobia. Despite the FCCPC intervention, MultiChoice implemented the price hike.
Similarly, banks implemented N50 stamp duty on deposits and withdrawals above N10,000, a development that generated public outcry in the country as the COVID-19 lockdown took tolls on incomes.
Electricity consumers also faced multiple increases in the prices of meters in June when the Nigerian Electricity Regulatory Commission (NERC) hiked the price by about 14 per cent. While the meter price increased due to the new 7.5 per cent VAT, it further increased in July following forex challenges.
According to the pricing template in April 2020, a single phase meter sold at N39,991.50 while a three phase meter went for N67,055.85. However, with the new pricing template of the NERC released in June 2020, the single phase meter rose to N44,896.17 while the three phase meter sold for N82,855.19.
Analysis shows that the single phase meter rose by N449, which is 11 per cent, the three-phase meter rose by N829 (18%).
The 11 DisCos then included the 7.5 per cent VAT, and as at today, a single phase meter goes for N48,263, while three phase is N89,069.
Hardship worsening – Workers, others
Some Nigerians who spoke to our reporter condemned the insensitivity of government at this time over the increases.
The national vice president, North-Central, Nigerian Association of Small and Medium Enterprises (NASME), Auwal Ibrahim Bununu, an engineer, said the increase in fuel price was negatively affecting Micro, Small and Medium Enterprises (MSMEs). This is because those into manufacturing of goods will find it difficult to increase any price now because the purchasing power of Nigerians is low as a result of the COVID-19, Bununu said.
Another entrepreneur and chief executive officer of Vivido Natural, Ruqayyatu Hussaini, said the increase in pump price of fuel would lead to high cost of transportation, which will affect businesses.
Mr Babatunde Emmanuel, who owns a private business in Abuja, said people who work in the private sector like him were more affected.
“The increase in the cost of living is an added burden from the government. Instead of palliative measures to cushion the effect of COVID-19 on the masses, what we get now are economic policies to siphon the meagre resources available.
“The increase in electricity bill, fuel hike and outrageous stamp duty tax is ill-timed and highly insensitive on the part of the government,’’ he said.
Kehinde Ojo also said the Nigerian government had been implementing policies that are anti-masses, even prior to the advent of COVID-19 in the country. He said introducing VAT increase, partial petrol deregulation and electricity tariff hike all at a time like this was bad, without cutting luxurious pay-packages of politicians
Mrs Joy Isaku, a banker in Abuja said traders told her that they paid more to get goods to the market, so they increased the prices of goods during the lockdown.
“Garri used to be N120 before the pandemic, but during the lockdown, it rose to N300, and prices for all other goods also skyrocketed; and we are still battling with increase in the prices of foodstuff till date.
“With the increase in electricity tariff and fuel, Garri currently sells between 400 and 450 a tier. The value of our N10,000 has been reduced to N5,000, if not less in value as a result of these increases,” she said.
Ibrahim Bulus, a civil servant, lamented that he had been very depressed since the hike in prices of fuel, electricity, and DSTV because his salary hardly met the needs of his family of six, even before the hike.
“The situation has become worse. I am wondering how I am going to cope because transport fare from my house to the office has doubled. Twice last week I stood at the roadside for hours waiting for someone I know to give me a ride,’’ he said.
Daniel Yakubu was one of those disengaged from the construction firm where he worked in May as a way to cut cost during the COVID-19 pandemic. He said he fell ill in July and underwent surgery in a public hospital.
He has so far accumulated bills in the hospital. He said he was also asked to come for regular checkups at the hospital. Since he doesn’t have a car, he often takes a cab to the hospital. He said with the hike in fuel, his family had resorted to taking him to the hospital in public vehicles.
“Things have really gotten difficult for me and my family since the pandemic. So many debts. And now this increase in prices; it is not easy at all.”
Josh is a standup comedienne and also anchors social events. However, for several months during the pandemic, his business was grounded.
He said his two-year old daughter had been diagnosed with pneumonia and he had been begging colleagues and friends every day for assistance to feed and take his daughter to the hospital, among other issues.
“The hike has made things more difficult for me and those who have been helping me,’’ he added.
A private school teacher in Kubwa, Abuja, simply identified as Wilfred, said since the lockdown, the school only paid salary for a month, after which he was left to hustle for his family.
“I leave my house in the morning and return in the evening because I had to go from house to house to teach pupils. Though it has not been enough, it helped my small family. But the latest increment of almost everything has made survival difficult,” he said.
Wilfred said he now spends more on transport fare while his initial N30,000 bi-weekly budget for his family upkeep could not sustain them anymore.
A surveyor, Adamu Abdullahi, said he got a pay cut of about 25 per cent from the private construction company he works for. While he said he was fortunate to still have a job as several people were either sacked or told to embark on leave without pay. He lamented that what he gets as salary used to be his allowances.
He said he now buys between N7,500, and N8,000 electricity units instead of N4,000 at his three-bedroom flat in an estate in Lokogoma,
However, Yakubu Bala said, the suffering of Nigerians, though painful, is necessary to navigate the economic and financial impact of the pandemic.
He said the future was bright, especially with the ongoing projects in the country. Bala added that even though fuel price has been increased, the country has to face the reality of deregulation of the downstream oil sector at one point or the other.
Lawyer, CSOs, economists kick
Yusuf Ali, a Senior Advocate of Nigeria (SAN) said government should try to balance the hikes with the welfare of the people.
“Government should provide additional palliatives to the people. Another balance is that if these things have been privatised and investors don’t see reason to make profit, they won’t invest their money,” he said.
The executive director of the Centre for Social Justice (CSJ), Eze Onyekpere, called on the government to rebuild the refineries instead of passing the burden to citizens.
“The Naira to Dollar was at N119 for so long, but now it is above N400 to a Dollar. So, if you are importing fuel, and you are using the Dollar, that means the price has got to increase and it has been increasing.
The only thing I am worried about is that this new money they are collecting, there is no guarantee that they would be properly managed. They are not cutting down on the cost of governance or their lavish lifestyles.”
Also speaking, the executive director of the Civil Society Legislative Advocacy Centre (CISLAC), Awwal Musa Rafsanjani, said Nigerians were indeed shocked at the outburst of the presidency on the non-negotiable stance of electricity and fuel price increase.
“The only reason government officials are doing what they are doing is because they don’t buy these products. They get everything free of charge. That is why they can open their mouths because they don’t know the sufferings Nigerians are going through,” he said.
An economist, Chijioke Okechukwu, said the rise in food prices was from the high exchange rate of the Naira to other currencies.
He said the ripple effect of this had adversely affected prices of goods and services and creating cost push inflation.
The economist said more Nigerians may resort to crimes and more jobs would continue to be lost as the hardship bites harder.
What we’re doing to curb COVID-19 effects – Presidency
While defending the recent hike in petrol price and electricity tariff, President Muhammadu Buhari assured citizens of government’s determination to remain alert to its responsibilities by preventing marketers from raising prices arbitrarily or exploiting them.
Buhari noted that increase in price of electricity and deregulation of the petroleum sector were crucial decisions that were taken at the beginning of the year, preceding the COVID-19 pandemic. He said protecting the poor and vulnerable, while ensuring improved service in the power sector remained a major priority for his administration.
President Buhari said many Nigerians who were yet to be connected to electricity would get that through the Economic Sustainability Plan (ESP), which would provide solar home systems to five million Nigerian households in the next 12 months.
He said the Central Bank of Nigeria (CBN) created credit facilities of N100billion for health care and N1trillion for manufacturing, and from January 2020 to date, over N191.87bn has been disbursed for 76 real sectors projects under the N1 trillion Real Sector scheme.
“The facilities are meant to address some of the infrastructural gap in the health care and manufacturing sector as a fallout of the COVID-19 pandemic and to facilitate the attainment of the government’s 5-year strategic plan,” he said.