 Welcome back to the very first hot topic. Nigerians have an advice to brace up for even tougher days as electricity tariff is about to be increased by over 40% in a development which may eventually end forms of energy subsidy in the country. There has been a monthly subsidy of about 50 billion era in the electricity sector because of revenue shortfall. But come July, this subsidy may just go, a subsidy on petrol was done away with. I've been joined by wisdom chap Jumbo, a public affairs analyst and a journalist to discuss this very important unfolding matter. Good morning to you, wisdom. Good morning. You're welcome. Thank you. So this question of affordability is coming even as the grid remains unreliable. Well, that's true. One issue Nigerians have always complained about is affordability. They don't even get this power they are even paying for and this tariff keeps going up. Tariff has also been a long standing issue over time. Every year, nearly every year we get increasing tariff but we need to understand that this tariff increment is tied usually to the realities, our economic realities. Human inflation is going up when the cost between the Naira and the dollar goes up. You can't but have the cost of tariff go up. That's because nearly 70% of all the power equipment in the country are imported. So and the tariffs are measured against the dollar. So presently now that you have the dollar floating and subsidy out comparing what the dollar rate is now, initially, sometime early in the year or last year, these tariffs were measured against around 460 CBR rates at the time as we used to have it. And removing that now, I mean, it is expected that tariff would definitely go up. Well, it was said that we've been said that to inform our electricity is actually more expensive than Nigerians are paying for it currently. Do you see this bringing Nigeria closer to filling that gap? Well, I mean, there are different categories of customers and how the discourse looks at it and how they pay for this power. If you receive around 20 hours of power, you're around the band A category of customers so you pay more. So we need to understand that as power will improve, if you have steady power in your house over a period of time, you should know that you will be paying more. And it's a different category of customers that receive around 12 hours of power. They place them around the band C and D. That's how the discourse and regulators place them. They also pay a certain tariff. So as you receive more power, as you go up that band, you pay more for it. We should see that happen in nature like I explained before because of the economic realities and you really cannot isolate this discourse from the realities we have in the country because they are also in need for business. So these things we see will happen and this is going to the realities we are presently in. Yeah. Well, economic reforms are inevitable but 40 percent, some may say that's way too high. If you're looking at the fact that Nigerians are having to deal with removal of subsidy in petrol, the floating of the mirror and now this one all coming at the same time, 40 percent may be like a killer for Nigerians. Do you share that view? Okay. Let me give you this little analysis so we sort of make sense of how this looks. So customers, I mean, following the multi-year tariff order in 2020 by NEC, Nigeria's Regulational Commission, NEC was approved by them, was supposed to run between 2022 and 2026. So they set a multi-year tariff, was supposed to run from last year. Now this, what they set now means customers pay around 16, in 2015 for example, 16 Naira per kilowatt. I'm trying to make sure I get the figures correct now. So presently that amount has gone up to around 55 per kilowatt. So if you look at this now, it has gone up. So with what is going up now, I'm trying to just get the numbers right. Customers will begin to pay around 71, 71, 72. And that's across the banks, both banks, A and B. Again, it now applies to a different bank as you look at it. So the 71 now that is between, presently now with the increment we are projecting to look as announced, bank A will begin to pay around 71 to 80. So you can see how it has gone up. And this review comes up every six months. So every six months NEC has this review to look at the economic realities and be able to say, okay, maybe this is what's based on performance. Look at the numbers and realities. Maybe this is how we should increase it. So it's bound to happen. But I've given you a breakdown of how we are fed between like 2015. So in the last eight years, downwards how this has gone. And this current tariff we are in now, I mean from last year, is bound to change because of the realities. Again, these discourse cannot operate in isolation. They also need the money because if they don't operate, if they are not able to operate, we won't have the power in the first place. Well, these reviews that they do every six months, have we ever had them reviewed downwards? No. I can remember, I mean I can recall but depending on the band you are in, sometimes it could come down. I can't say for certain of the numbers now. But I'm sure it could come down. But again, I think the main issue we should be addressing is endurance need to be metered. The issue of metering is still a big problem. So you still see us, some areas across Nigeria, they don't even have meter. You apply for the meters for a long time, they've not gotten it. So if we do meter Nigeria's, we can even measure the accurate number of amount they need to pay for the power they get. And most places don't even get power at all. So we need to tackle the issue of metering, which is a very big problem. Why have we had this metering gap? Why have we had it? It's been a major issue of the time. Why do we still have it? For every system, they are obviously inefficiencies. And I will say this issue, we are still struggling with metering is an inefficient issue, inefficiency issue for the sector. That, I mean, they need to address quite quickly. I mean, I can't speak for the discourse, maybe they need to come speak for themselves, but an answer this question, why do we still have metering issues in the country at this time? Because you're even run at a loss if you cannot meter Nigeria. I have a meter in my house and I have relatively fair power supply where I live, which I pay for. So if you can meter the citizens, how do you measure this? So this goes to answer this question. I mean, literally should be something that you apply for today and you get to more. And it should be something that we don't need to be discussing so much. So I think you can credit that to an inefficiency issue in the system. All right. Is this potentially just one of those growing pains the country has to suffer? If this administration is serious about growing the economy and providing functional infrastructure? I think unfortunately, yes. We need to be able to bear this. The President Tunibu has inaugurated the National Economic Council. And I'm hoping that the council will sit and look at this issue of electricity and tackle it head on. But the good news is, if you recall, the Nigeria Electricity Act was recently signed in. Once that kicks into play, we have a decentralized approach to power. So it means states, we take charge of power in the various states that may likely relieve the grid of the pressure because currently the grid is even produced around 3,000 plus megawakhs. I mean, even with about 17 power stations we have. So when we decentralized that to the state, these states will take control of that. With the law now, they can generate, transmit and distribute power in areas covered by the grid in the various states. Again, with the kind of policies they put together in the various states, that will help them to tackle this issue of power in the various states. We are relieving the grid. And with the new law, I mean, they are very good positive sides of the new law, a page was written for renewable energy. So it means we can leverage renewable energy sources like solar to be for power in the various states. I want to see how states are going to leverage that again. Legal state is already doing that. Yes, legal states, federal states, Kaduna, are way ahead of other states. But I want to see, since there are new governments in place across the country now, I want to see states rise up to the occasion, make policies, make laws in their various states that will tackle this. By the time they begin to do all of this, maybe we can even have a cushioning effect because every state is specularity. Yes. Again, we are relieving the grid. With the new law also, you can even, if you produce power independently, you can give back to the grid, which is what we currently don't have. So there are many positive sides of the new law, new electricity act that I think sector wise, people are excited about it and we hope to see. So that will be the cushioning effect of this issue of tariff. So legal state takes hold of their state, reverse state takes hold of their state, they do state. So every single state begin to decentralize this law and we can see changes will happen, hopefully. I think that's the only way, but until the state takes charge of this law, I think NEC will still be regulating for the country. Oh, I think it's just about two areas now that they have provided solar to. Those who are in areas where they have not received any kind of palliative are asking, what about us? What sort of palliative should be given? But John, what you just said now, because all this coming at this time is definitely gonna put a lot of strain on the pockets of Nigerians. Those earning powers are not strong enough to carry these at this point in time. What should states be doing? And indeed even the federal government. So I'll tell you something. For example, renewable energy now. I mean, people that suffer this whole issue now, people at the bottom line, the last man, the people in the rural communities. And when they're in the last population. And they're in the last population. So if government begin to invest in things like mini-grid in these rural areas to cushion the effect as long as the sun is free, solar is gonna work, it's gonna produce power. If we begin to put more investment because developers, the mini-grid developers, they need money to set up mini-grids. So if the government can do more in that area, especially at the state level, we can see more. If government can also put in money to distribute solar home systems in those rural areas, I think it's going to help a lot. Because some of these homes in rural areas, what they need power for is just to charge their phone, have a bulb in their house. We don't have so much to sort of power. And solar home systems can easily solve that problem for them. So government needs to look into this area more if they need to cushion the effect. And of course, work with the players in the sector. Now I'm talking at state levels. Work with the players in the sector. What can be done to cushion this? What can we do? We need to be innovative in the ideas we put up because it is tough. And you believe you may, if we get power right in Nigeria, as I'm hoping that we are trying to, you make life easy for Nigerians because we spend so much on power. I mean, I was just hearing from the news in the earlier segment of the show that, that there will be 7.5% tax on diesel soon. I mean, I heard that one of the newspapers earlier today. So when you begin to tax diesel, that sort of carries all the goods from the markets into the main towns and everything, then there's an issue for us. You know, the subsidy was already removed from diesel, which shut the price up to 780,000. And now if you remove subsidy on fuel, you have to tax diesel again. You are costing more pain. And now most generators, most companies, they get diesel to fuel because they have to generate their own power to run their business. So when you remove the costs, many private organizations spend to generate their own power. When that cost can be off, you can see that they can even use their money into employing more people. And I mean, the economy can even grow. The barber, the barber in the house, the barber shop on the street can be able to pay by his prepaid, open a salon and don't have to go and buy fuel. And I mean, you are boosting the economy in that way. So I'm believing that the economic councils, you know, graded by President Thunambo recently, will be able to sit, you know, and it's a council with the governors to look at less, beginning to act. Wouldn't it be innovative to solve this problem? Once you solve the problem of power, believe in me, I'm sure you must have solved 50% of the problems Nigeria's are facing. You haven't signed this electricity a billion to law, this recent signing. Should the government have probably waited before removing this subsidy? I think so. Although we all agree, subsidy must go. It's long overdue. But I think- I'm not sure if we all agree that subsidy must go from this sector. From this sector. From the power sector. The power sector. I'm not sure that we all agree on that. Yes, most Nigerians agree that subsidy should go in petrol because of all the corruption there. But in the electricity sector, I'm not sure that all Nigerians are on the same page with that. Okay. I think first of all, as at May, the Guardian reported that the government alone is, I mean the government, nine agencies of government and ministries are owning this goes about 75 billion. Yes. They are the greatest owner of debtors. Yes. The Guardian reported that. The electric companies, yes. Let's pay this discourse this money. Maybe if we pay them this money, we can go a long way to begin to solve this problem again and make them even work, you know. So, but if subsidy should power, you need to pay for the power you use and power is expensive across the world. Perhaps the government were to pay off their debt. Pay off the debt, yes. And not remove the subsidy. Do you think you would have made a difference and maybe remove it later if at all? I don't know. But in the removal of electric subsidy, you need to have a cushioning effect. There needs to be a gradual process to this. You know, you don't just take the citizens by storm, you know, and just you're removing it. And so I've been taken by storm as it were right now. That's what I'm saying. I was trying to look at the first subsidy and how it was removed, even though we all agree that it should be gone. I think there should have been an approach to it. Although it has been off the budget and was supposed to go off by the end of June, by the way, you know, but the way it was said and the way the effect hits the system is what might be the issue with many people. But there needs to be a gradual process. There needs to be engaging of stakeholders. There needs to be other cushioning effects, you know, set within the system to be able to help citizens, you know, manage this. There needs to be a communication approach to people to make citizens understand the need why we need to do this. I like to say, this is something that should have been gone 10 years ago, you know, and we are doing it now, but there needs to be an approach to it. Not just take citizens by storm the way it was, as it says. So, but if we solve the issue of power, I repeat again, we would have solved 50% of the problems Nigeria's are facing. If you hear the costs, most banks, for example, and most corporate organizations pay to generate their own power on diesel, you see, it's a business on its own. It's a business on its own. A diesel supplier can live in a bag of rice every year because he makes a lot of money, for example, from that supply. But the companies, you know, bear the brunt, and it's a lot. So if companies can spend less on power, a lot can happen with that money to employ more people, put back into their capital for the business, and run more effectively, the SMEs can even flourish. SMEs are even the worst that suffer from this. You know, if you run a small business, or you calculate the cost at which you need to fuel your generator, either by diesel or by petrol, just to keep your business running, it's something else. So this is something we need to address head on. And I want to believe strongly, looking at the New York Nigeria Electricity Act, that it's going to be a long-term approach to finally solve this problem. But let's just hope that, you know, fixing this wouldn't make the cost of paying for electricity almost the same thing as having to buy fuel and diesel for your generator. I'm not sure you can get to that point. That's where the question of why 40%? So I'm not sure you can get to that point. Do the maths. Like I also like to say, people that use solar, I use solar, a lot of people use solar. If you do the maths, the power you get from your discourse, I'm not sure it can be as expensive as how much you spend to even fuel a maintain your generator. I mean, power from the grid is always cheaper. You know, and the way you now put solar in that mix, you have gone way cheaper. You know, so even if, I mean, I know a lot of organizations can pay that money because the more you get the power from the grid, the more you need to pay. But I'm not sure it can be more than the cost of getting a generator and powering it. I'm not sure. No, no, I disagree on that. So, but strongly where we fix this issue of power, organizations get their power from the grid, they can pay less and that's our work. Solar, for example, do the cost. Already upfront cost seems to be high. But when you do the cost comparison over time, diesel, for example, what it was three years ago, isn't the same now. But the solar panel you bought three years ago can last you for 20 years. The battery, depending on the kind of battery you get, can last you for seven years. So you can see the cost. So, because those are the two components that make the solar expensive in the first place. You know, and all that you can do again as a country is begin to put in incentives, you know, to make this solar component even way cheaper. You know, in country manufacturing, for example. Exactly. Yeah, if we can make this in country, we can drive down the cost, you know, and that even makes it more cheaper. I imagine that now that states can now generate, distribute, that a lot of them, as you've said, they become more creative. Yeah. And so they may, and part of the campaign promises by the presidential aspirants is to make Nigeria a country that manufactures as against a country that imports depends solely on imports. I imagine that some of these things may start springing up. Manufacturing companies are going to start springing up and those who are struggling may become strengthened. Now, market price stabilization may soon bring this prices down, isn't it? But the question is, how soon are we gonna see that happen? I don't, we can't really tell how soon. But I think that is the idea. I mean, in the long run, like I alluded before, the cost might even normalize. When there's competition within the space, that will also help to drive down because when there's increase in demand also in this competition. So in the long run, things might, but we need to be able to produce the things we need to use in country because what makes things go high, the cost of dollar, effects issues, I mean, our ports, even to import things can be really, yeah, but the bottlenecks. And size duties, which has been increased. Manufacturers Association of Nigeria, they are crying about that. So all of these also affect power. Like I said before, nearly 70% of all the equipment that makes, you know, that the power sector use. They're important. They're important, you know. So what is even increasing the cost of solar, for example, is the panels are important, the batteries are important, everything are important. And when you add the effects issues, everything has gone up, you understand? So, and as it is now, that's where we are. When the dollars, no more CBN dollar again, everybody is, I mean, it's an open market now. You go, look at how it has gone up to about 600 or something. So you can see that. Even 700. Even 700. What I saw in the paper today, 700. I don't even know how much it closed yesterday, you know, but it affects every single thing in the economy. So if we don't begin to look towards producing internally, then this cost of effects will continue to affect every single thing. So other approach I may recommend for the National Economic Council is, let's look at how we can drive more localized production, localized manufacturing, you know, build more solar assembly plants, build more battery assembly plants or production plants, you know, begin to look how we can make this more into the country. What are the things that needs to make that happen? I want to believe these are the things that the states, when they are putting together their electricity policies, they will try to look at how they can drive in their various states, the electricity markets, to see how they can localize a lot of things. Well, subsidy on itself is not bad. I keep going back to that. Because I've done some research and I know that some societies really do subsidize different aspects of the economy of their life so that the citizens do not have to pay 100% for certain things. So where are we getting it wrong? Maybe we are not subsidizing the right things. Maybe we need to see how we can take the money since subsidy is out now from petrol. Let's subsidize other things like education, like healthcare, you know, like transportation. Those are the things that take the bulk of money from citizens. How do we subsidize those things to make it easier for citizens to survive? So even though subsidy is not a bad thing, which maybe I don't even disagree with, but we need to be subsidizing the right things. So as a country, we need to ask ourselves, are we subsidizing the right things at the moment? Should we not look at, where we need to put money to subsidize? This education, the cost of education now is pretty much expensive. Can we put in money there? So many out of school children. Can we put in more money than healthcare? The health sector is one thing that I hope the president administration will address in the long run. Can we put in more money there to subsidize the cost of healthcare? Transportation, I mean, I know how much people pay or I pay or spend on transport. Even now that for us subsidies out, everything has gone up. Especially now. Can we put in more money in transportation? Can we have more public mass transit? How can we put in more money into that sector to subsidize it for citizens to be able to manage? So I think these are those areas. Maybe we're not subsidizing the right things. We need to put money in the right place. Oh, thank you. wisdom chap jumbo for your time on breakfast this morning. You've certainly shed more light on this very important issue that's unfolding before us. Thank you. While you're still watching the breakfast on Plus TV Africa, we'll take a break and come back with our second hot topic. Please stay with us.