AN ASSESSMENT OF PUBLIC EXPERIENCE WITH THE INCREASE IN ELECTRICITY TARIFF IN GWARINPA, ABUJA.

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Early people relied on fire to acquire the advantages of light, heat, and cooking. Presently, there is a frequent tendency to overlook or disregard the significance of these enjoyments (Chilwel 2017). By performing a basic action like toggling a switch, pushing a button, or turning a knob, we can promptly have access to electrical power. Electricity is a fundamental element of our everyday existence. The utilisation of power plays a significant role in our daily activities across several locations, including home, school, the local shopping centre, or office (Charles et al., 2019). Our everyday existence is dependent on electricity from the instant we awaken in the morning until we retire to bed at night. Electricity is essential for the optimal operation of various equipment in our bedroom, including the lighting, the hot water supply, and Dad's electric shaver. Our breakfast is heavily dependent on electricity. The refrigerator, which is essential for preserving the low temperature and quality of our food, necessitates energy to operate, as does the grill, which is utilised for preparing bacon and eggs. Electricity is indispensable for both our daily household tasks and several parts of contemporary life, such as industries that are crucial for our welfare and communication platforms like radio, television, email, and the Internet. (Arthur, 2017).

Electricity consumption is frequently linked to measures of economic growth, productivity, and the reduction of poverty (Ouedraogo et al., 2021). The seventh objective of the Sustainable Development Goals (SDGs) is to guarantee widespread availability of reliable, affordable, and eco-friendly energy for everyone. This target has garnered universal acceptance from all 193 member nations of the United Nations (Irwin et al., 2020). According to Apenteng et al. (2018), in 2019, around 770 million people globally did not have electricity, and 75% of these individuals resided in sub-Saharan Africa. Furthermore, this problem is usually confined to a particular industry, which hinders policymakers from comprehensively grasping its repercussions on wider government services such as education, food supply, and healthcare.

The primary reasons for electricity consumption are undoubtedly the decrease of environmental noise and pollution, as well as the enhancement of healthcare through the use of clean energy, specifically electricity. Moreover, the prioritisation of energy usage/consumption is justified by the goals of increasing production, alleviating poverty, and enhancing education. The achievement of these justifications in Nigeria is doubtful, given the implementation of the electrical pricing hike by the Tinubu administration. The NERC disclosed an increase in the power tariff for consumers in Band A during a press conference in Abuja on April 3. The new rate for affected customers would be N225 per kilowatt-hour, which is more than the previous rate of N68/kWh. The hike demonstrated a substantial increase of 240 percent (Punch, 2024). An electricity tariff is the method by which you are billed for the amount of electricity you consume. The tariff you possess is contingent upon your geographical location and the type of metre you possess. Tariffs consist of various elements, including supply charges. The cost of electricity consumption is subject to fluctuation according on the time of day or the season (ThisDay, 2024).

The recent pricing rise in Nigeria, implemented by President Tinubu's administration, has been explained as essential for strengthening the dependability of electricity supply, improving service delivery, and maintaining the financial sustainability of the energy industry. The increase in tariffs is perceived as a method to create income for the purpose of infrastructure expansion and upkeep. Although the government has provided reasoning, the public has responded to the tariff rise with a combination of positive and negative sentiments. While several individuals comprehend the necessity of elevated tariffs to enhance the quality of services, a significant number of others view it as an extra financial encumbrance, particularly in light of the prevailing economic difficulties experienced by the nation. Gwarinpa, renowned as the most extensive residential development in West Africa, epitomises a multifaceted and economically consequential region in Abuja. The area encompasses a diverse range of socioeconomic classes, making it an appropriate place for evaluating the public's response to the tariff hike. The district's diverse demographic offers a complete portrayal of how various parts of the population are impacted. This study aims to evaluate the public's experience with the recent rise in energy tariffs in Nigeria, using residents of Gwarinpa as participants. 

1.2 Statement of the Problem

The electricity system in Nigeria has historically been marked by persistent inefficiencies, insufficient infrastructure, and an unpredictable power supply, which have had a substantial impact on the country's economic progress and the well-being of its population. In response to these difficulties, President Bola Tinubu's administration implemented a rise in electricity pricing, asserting that elevated tariffs are essential for attracting investment, improving service provision, and guaranteeing the long-term viability of the electrical supply.

An important issue presented by the power pricing hike is the economic strain it places on people and companies. According to Udoh (2024), the rise in tariffs has placed a considerable burden on the financial situation of numerous Nigerians. Increased electricity costs for low-income households result in reduced funds for crucial expenditures like food, education, and healthcare. Small and medium-sized firms (SMEs) encounter rising operational expenses, which can impede their expansion and long-term viability (Akorede et al., 2024).

The government's ineffective communication and engagement are significant factors that contribute to the public's negative perception of the rise in electricity tariffs (Moshood, 2024). The government's efforts to communicate the justifications and benefits of the electricity price hike to the general public have been considered inadequate, leading to widespread misunderstandings and the spread of inaccurate information (The Guardian, 2024). The absence of efficient communication has heightened public discontent and resistance to the policy, presenting a significant barrier to the successful implementation of the tariff modifications. Gbemi (2024) observes that the government's explanations for the rise in tariffs are often seen as unclear or missing in substantial detail. A substantial proportion of Nigerians hold the view that the information provided lacks transparency on the exact costs, benefits, and rationale behind the decision. The absence of concise and comprehensive explanations hinders the public's understanding of the imperative nature of the growth and its ultimate advantages.

In addition, there is a scarcity of extensive research that particularly concentrate on the Gwarinpa district, despite the crucial significance of comprehending public experiences and perceptions of the tariff hike. The lack of study in this area deprives policymakers of the detailed understanding necessary to develop solutions that effectively target the specific issues and requirements of Gwarinpa inhabitants. Therefore, the necessity for doing this investigation arises.

Objectives of the study

The primary objective of this study is to critically assess public experience with the increase in electricity tariff in Gwarinpa, Abuja. Specific objectives of this study are to:

To determine the extent increase in electricity tariff affects business activities in Gwarinpa

To identify the factors associated with the increase in electricity tariff.

To evaluate the impacts of the tariff hike on households in Gwarinpa.

To provide solutions to address public concerns and improve the effectiveness of electricity sector reforms.

1.4 Research Questions

The following research questions which are in line with the objectives of this study will be answered in this study:

What is the extent increase in electricity tariff affects business activities in Gwarinpa?

What are the factors associated with the increase in electricity tariff?

What is the impacts of the tariff hike on households in Gwarinpa?

What are the solutions to address public concerns and improve the effectiveness of electricity sector reforms?

1.5 Research Hypotheses

To determine the effectiveness of this study, the following research null hypotheses will be formulated to guide the study and it will be tested at 0.05% levels of significance.:

Ho: The extent increase in electricity tariff affects business activities in Gwarinpa is low.

Ha: The extent increase in electricity tariff affects business activities in Gwarinpa is high

1.6 Significance of the study

This study aims to comprehend and evaluate the public encounter with the rise in energy costs in Gwarinpa, Abuja, during President Tinubu's tenure. The importance of this study resides in its capacity to offer significant information for policymakers, regulators, energy service providers, and the general public. The study intends to uncover the diverse effects of tariff increases on different segments of the population by examining Gwarinpa, which serves as a representative sample of Nigerian society.

The results will offer empirically determined insights into popular sentiment, enabling legislators to make educated decisions that balance economic feasibility and public support. Acquiring understanding of the public's concerns can lead to more thoughtful and effective adjustments to policies. Moreover, the study can contribute to the advancement of more effective methods for conveying the rationale and benefits of tariff hikes by identifying shortcomings in current communication efforts. Improving the clarity of communication can reduce the dissemination of false information and promote public trust.

Furthermore, the study will yield benefits for NERC. The findings can aid the Nigerian Electricity Regulatory Commission (NERC) in understanding public views and addressing problems related to transparency, fairness, and accountability in the tariff-setting process. The study highlights the importance of involving a wide range of stakeholders, including consumers, in the process of regulating. Greater participation can lead to regulatory outcomes that are fairer and more universally agreed upon. In addition, through an analysis of the wider effects on public health, education, and overall quality of life, the study can provide guidance for actions aimed at reducing the adverse outcomes of tariff increases. This guarantees that the reforms in the electrical sector have a favourable impact on the overall welfare of society.

Moreover, the resistance from the general populace towards rate hikes can lead to instability in the energy sector, perhaps causing non-compliance with rules and an increase in the illicit practice of energy theft. By understanding and addressing public concerns, the sector can achieve improved stability and effectiveness. An appropriately crafted and rational pricing framework has the capacity to improve the investment climate in the electricity sector, thereby enticing both local and international investors who are essential for the progress of infrastructure and improvement of services.

Furthermore, future scholars will utilise it as a thorough examination of the current body of literature. Consequently, other students with an interest in studying this subject will have the opportunity to utilise this work as reliable knowledge that can be comprehensively evaluated. 

1.7 Scope of the study

Broadly, this study focus is to critically assess public experience with the increase in electricity tariff in Nigeria. Specifically, this study seeks to determine the extent increase in electricity tariff affects business activities in Nigeria and identify the factors associated with the increase in electricity tariff. 

Further, this study will focus on evaluating the impacts of the tariff hike on households in Nigeria and it also seeks to provide solutions to address public concerns and improve the effectiveness of electricity sector reforms.

The study is carried out in Gwarinpa, Abuja

1.8 Limitations of the study

As is common in all human endeavours, the researchers faced minor limitations when conducting the study. The main limitation was the lack of extensive literature on the subject, as there is limited data available for an assessment of public experience with the increase in electricity tariff in Gwarinpa. Consequently, a significant amount of time and effort was necessary to locate the appropriate materials, books, or information and to gather data. 

Additionally, this study is constrained by its small sample size and narrow geographical scope, focusing just on Gwarinpa, Abuja. Consequently, the results of this study are not applicable for generalization, thereby leaving room for further research. 

Additionally, the researcher's limitations were primarily due to financial constraints, as they are a student and do not have a source of income to sustain themselves. It was challenging to afford transportation expenses to and from the study location due to the high cost of transportation, which is influenced by inflation in Nigeria today.

Furthermore, the researcher faced a time constraint due to the need to do this research while also fulfilling the obligations of attending lectures and other educational activities.

1.9 Definition of terms

Public perception: Public perception is simply the type of information obtained from a public opinion survey. That is, “publicopinion” is merely the aggregate views of a group of people (usually a randomly selected sample) who are asked directly what they think about particular issues or events.

Electricity: Electricity is the set of physical phenomena associated with the presence and motion of matter possessing an electric charge. Electricity is related to magnetism, both being part of the phenomenon of electromagnetism, as described by Maxwell's equations. Common phenomena are related to electricity, including lightning, static electricity, electric heating, electric discharges and many others.

Tariff: Tariff is a means of generating revenue for the government for the improvement of the welfare of her citizenry or serves as a protection for infant industries. Tariff reduces import by raising prices.