Nigerians should be ready for hike in power and petrol prices immediately after the 2019 general elections, economists and investors in the power and petroleum sectors have warned.
In a chat with New Telegraph in Lagos, they insisted that the expedient hike in prices of electric power and Premium Motor Spirit (PMS); two utility products in Nigeria, will wait till immediately after the general elections.
Speaking with this newspaper last night, CEO of Financial Derivatives, Mr. Bismarck Rewane, a frontline economist, said nothing would happen on both power tariff and petrol price until after the election.
“Nothing will happen until the government gets another four-year mandate. If they do now, they will lose and that will not be a wise decision,” he said.
Similarly, Managing Director, Cowry Asset Management, Mr. Johnson Chukwu and investors in the 11 distribution companies, said that no party or individual that emerges winner in the election will sustain the energy tariff and oil subsidy burden.
The All Progressives Party (APC)-led Federal Government, New Telegraph gathered last weekend, foreclosed the processes it started to make the current prices of these two products competitive basically because of the effects it could have on voting pattern during the forthcoming general elections.
The Nigerian National Petroleum Corporation (NNPC) incurs about N774 million daily under-recoveries to subsidise the N145 per litre pump price of petrol across the country.
Chukwu told this newspaper that the “government is absorbing the shock presently, which is inevitable, but at the long run, any government that comes in after the election will definitely review the prices.”
Specifically, he said: “Immediately after the election, whoever wins will not sustain the energy tariff and oil subsidy.
“Even if the government increase tariff today, the power generation will not change overnight, it will only enable operators to raise funds to strengthen their networks.”
Besides, he noted that the reality of the matter was that no government will inflict hardship on the masses prior to an election.
“So they are actually not willing to say that they want to increase tariffs or drop subsidy on oil before the general elections.
“They will be going for votes in the next six months to seek for mandate and there is no reason for any government to want to increase any tariff few months to the national election. It doesn’t happen anywhere in the world.
For me, it is a known fact that government will not increase the tariff. The government is currently absorbing the loss in terms of price difference between boarding price of petroleum product and the pump price,” he said.
Blaming the current woes in the power sector on the government’s inability to effect a cost-reflective tariff for power, investors in the 11 DISCOS in the country, said through their Director, Research and Advocacy, Association of Electricity Distributors (ANED), Sunday Oduntan, that the government can’t raise power tariff.
“They (the government) can’t do that until after the elections. They just cannot do that because it will be politically unwise. You know, there are problems,” he said, but refused to be specific.
He described the government’s inaction to raise the power tariff as “illegal.”
Besides, he insisted that actions and inactions of the Minister of Power, Works and Housing, Mr. Babatunde Fashola, on the tariff and relationship with shareholders should be checked if the country is ready to be out of the power crisis.
The minister’s relationship with stakeholders, he said, is headmaster/pupils rapport, as such, “gives no room for sincere collaboration.”
“Under the watch of Mr. Fashola as the minister, the Nigerian Electricity Regulatory Commission (NERC) has conducted no minor review of the Multi-Year Tariff in violation of the law. This has worsened the under recovery in the entire value chain far above N1.1 trillion,” he said.
Stating that the DISCOs are battling with dire economic situation foisted on them by the lack of cost-reflective tariff, Oduntan maintained that only one of the DISCOs had foreign direct investment as at the time the Power Holding Company of Nigeria (PHCN’s) assets were sold to them. Others procured the assets with facilities from the Nigerian banks.
Meanwhile, International Oil Companies (IOCs) in Nigeria’s oil and gas industry have commissioned studies on feasibility of violence during the 2019 general elections with focus on protection of over 1.2 million barrels of equity crude they produce daily in the country.
This move, investigations by this newspaper showed, has led most of the oil producers into talks with foreign and local safety and security consultants as the polls draw nearer.
Describing this move as a normal routine by “multi-national business concerns”, a management staff of one of the IOCs who confirmed this development to this newspaper, maintained that the consultants are being charged to beam searchlight on areas such as the oil-rich Niger Delta where over 2 million barrels of oil are being produced jointly by the IOCs, NNPC and the indigenous oil companies.