PUBLIC PERCEPTION TO ELECTRICITY TARIFF HIKES IN NIGERIA (BASED ON PRESIDENT TINUBU ADMINISTRATION)

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Primitive humans depended on fire to obtain the benefits of illumination, warmth, and food preparation. Currently, we often fail to appreciate or acknowledge the value of these pleasures (Chilwel 2017). With a simple action such as flipping a switch, pressing a button, or rotating a knob, we can immediately access electrical power. Electricity is an integral component of our daily existence. Our daily activities in many settings, such as home, school, the local shopping centre, or office, are largely dependent on the utilisation of power (Charles et al., 2019). Our daily life is reliant on power from the moment we wake up in the morning until we go to sleep at night. Electricity is required for the proper functioning of many items in our bedroom, such as the light, the hot shower, and Dad's electric razor. Our breakfast is highly reliant on electricity. The refrigerator, responsible for maintaining the coolness and freshness of our food, requires energy to function, as does the grill, which is used for cooking bacon and eggs. Electricity is not only crucial for our everyday domestic activities, but it also plays a vital role in several aspects of modern life, including industries that are essential for our well-being and communication mediums like radio, television, email, and the Internet. (Arthur, 2017).

According to Adedigun (2021), sufficient power supply is an essential requirement for the growth of any nation. The generation, transmission, and distribution of electricity are costly activities that demand significant financial resources and capacity. Given the current situation in Nigeria, where the availability of cash is gradually decreasing, it is imperative to develop new and novel methods to tackle the issue of power supply.

On the 3rd of April, 2024, The Nigerian Electricity Regulatory Commission (NERC) has just announced a substantial hike in electricity tariffs for Band A customers, who are defined as those receiving an average daily electricity supply of 20 hours or more (Premium times, 2024). The new tariff has increased by 230 percent compared to the old cost, rising from N68 to N225 per kilowatt hour. The purpose of this increase is to decrease the projected N2.9 trillion power subsidy in the 2024 fiscal year. This is necessary since the Federal Government is facing financial difficulties and is unable to fulfil its responsibilities (Aliyu, 2024).

In defiance of public opposition, the federal government has indicated its intention to expand a comparable policy to encompass all Nigerians with access to on-grid electricity over the next three years. The government's objective is to unify the whole power industry under a single band, while ensuring that cost-reflective rates are fully implemented within the specified timeframe (Nairametrics, 2024). The recent development marks the initial phase of the government's comprehensive restructuring of government subsidy assistance, excluding vulnerable and lifeline customers who require low tariffs. The Commission has reported saving approximately N1.4 trillion from the projected N3.2 trillion subsidies for 2024 (Bankole, 2024: Nairametrics, 2024).   The government's annual electricity subsidies fluctuate, increasing by 22.16 percent from N528 billion in 2019 to N645 billion in 2023. The breakdown of the total amount reveals that the Federal Government was projected to remit N225 billion to the power sector in 2015, N308 billion in 2016, N351 billion in 2017, N440 billion in 2018, N528 billion in 2019, N501 billion in 2020, N251 billion in 2021, N144 billion in 2022, and N645 billion in 2023 (NBS, 2024: Nairametrics, 2024). The data exhibits a consistent upward trajectory from 2015 to 2019, followed by a decline in 2020 and future years characterised by irregular fluctuations.

Based on the pattern shown above, it is evident that there has been a variation in the annual amount sent by the federal government for the purpose of subsidizing power. The price variation could be attributed, in part, to external influences such as governmental regulations, economic circumstances, or technological progress in the energy industry. For instance, it has been assumed that there will be savings of around N1.4 trillion resulting from the withdrawal of subsidies for band A customer, as stated by the Commission. This is based on the predicted N3.2 trillion subsidies mentioned in the NERC and Nairametric reports from 2024. While the current amount is considerably higher than the subsidy in 2023, it clearly indicates that a shift in government policy plays a crucial role in determining the outcome. Therefore, in order to predict future trends, it is advisable to analyse past data. However, given the volatile nature of this data, it is essential to complement the analysis of prior data with an examination of policies and economic factors such as inflation and foreign currency rates in order to construct a more accurate predictor.

The Nigerian energy sector has encountered a multitude of obstacles over time, such as deteriorating infrastructure, insufficient maintenance, and limited power producing capacity. The aforementioned problems have led to a power supply that is both unstable and unreliable, hence impeding economic growth and development (Assiak, 2023). Prior governments have made efforts to implement different measures, including the privatization of the Power Holding Company of Nigeria (PHCN) and the establishment of regulatory entities like the Nigerian Electricity Regulatory Commission (NERC) (Collins et al., 2023). The administration of President Bola Tinubu has endeavored to sustain and enhance these reforms in order to stabilize and enhance the power sector. A very contentious action has been the rise in electricity costs. The administration asserts that the increase in tariffs is essential for enticing investment into the sector, enhancing service delivery, and guaranteeing the long-term viability of energy provision (Nairametrics, 2024).

Regardless of the government's justification, the increase in tariffs has provoked significant responses from the people. The rise is perceived by a significant number of Nigerians as an additional financial strain, particularly considering the nation's elevated poverty level and the economic difficulties encountered by households and businesses (Punch, 2024). There has been a significant public outcry, with a large number of people demanding either a reversal of the tariff increase or the implementation of measures to lessen its impact. In response to the rise in energy prices, the Northern Elders Forum (2024) observed that the substantial increase in electricity tariffs will have a substantial adverse effect on the already disadvantaged population, further widening the disparity between the affluent and the impoverished. The individuals urged the Federal Government to promptly reassess what they deemed to be a poorly thought-out choice and take into account the severe economic circumstances experienced by the majority of Nigerians. The NEF firmly contends that this decision was made without meticulous consideration of the economic realities encountered by the majority of Nigerians, hence underscoring the government's deficiency of empathy towards its citizens. This study aims to investigate the public perception of electricity tariff increases in Nigeria during President Tinubu's administration.

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 factor contributing to the public's poor opinion of the increase in power tariffs is the government's lack of effective communication and engagement (Moshood, 2024). The government's attempts to convey the rationales and advantages of the power tariff increase to the public have been deemed insufficient, resulting in extensive misconceptions and dissemination of false information (The Guardian, 2024). The lack of effective communication has intensified public dissatisfaction and opposition to the policy, posing a substantial obstacle to the proper execution of the tariff adjustments. Gbemi (2024) notes that the government's justifications for the increase in tariffs have frequently been regarded as ambiguous or lacking in significant elaboration. A significant number of Nigerians believe that the information presented lacks openness on the precise expenses, advantages, and the underlying reasoning behind the choice. The lack of clear and thorough explanations makes it difficult for the public to comprehend the necessity of the increase and its final benefits.

Moreover, Gbemi (2024) notes that the government has neglected to take into account the social and behavioural consequences of the energy price increase on its population. Jide (2024) supports her claim that the tariff hike could result in alterations in energy consumption patterns, potentially having adverse effects on public health, education, and overall well-being. At-risk demographics may turn to hazardous substitutes for energy, hence increasing potential dangers. Jide (2024) proposes that in order to mitigate the impact of the increase in electricity prices, the government should strengthen and expand social safety net programmes. This would ensure that disadvantaged groups have access to vital services such as healthcare, education, and food security, while also managing the higher costs of electricity. The study seeks to enhance the public's awareness of their reaction to increases in power tariffs in Nigeria. It also attempts to provide practical answers for effectively managing the economic, social, and political aspects of the sector's reform endeavours. Therefore, the investigation is necessary.

Objectives of the study

The primary objective of this study is to critically assess public perception to electricity tariff hikes in Nigeria (based on President Tinubu administration). Specific objectives of this study are to:

To determine the extent increase in electricity tariff affects the general public under President Tinubu administration

To identify the factors influencing public opinion on the tariff increase.

To evaluate the impacts of the tariff hike on Nigerians.

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 the general public under President Tinubu administration?

What are the factors influencing public opinion on the tariff increase?

What is the impacts of the tariff hike on Nigerians?

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 the general public under President Tinubu administration is low.

Ha: The extent increase in electricity tariff affects the general public under President Tinubu administration is high

1.6 Significance of the study

This study offers a comprehensive understanding of Nigerian residents' perspectives on the tariff hikes implemented during President Tinubu's tenure and the wider consequences of these perceptions on economic, social, and political stability. The study will provide a fundamental reference point for policymakers, regulators, and stakeholders in the electrical sector. Furthermore, it will hold great importance for both students and researchers.

The results will provide empirically derived insights into public opinion, allowing politicians to make well-informed decisions that strike a compromise between economic viability and public approval. Gaining insight into the public's apprehensions can result in more deliberate and efficient policy modifications. Additionally, the study can aid in the development of more efficient techniques for communicating the reasoning and advantages of tariff increases by identifying deficiencies in current communication endeavours. Enhancing communication clarity can diminish the spread of disinformation and foster public confidence.

In addition, the study will also provide advantages to NERC. The findings can assist the Nigerian Electricity Regulatory Commission (NERC) in comprehending public attitudes and resolving concerns pertaining to openness, equity, and responsibility in the process of setting tariffs. The study emphasises the significance of engaging diverse stakeholders, such as consumers, in the regulation process. Increased involvement can result in more equitable and widely acceptable regulatory results.

Furthermore, the opposition from the general public towards increases in tariffs can result in instability within the power industry, which may include non-adherence to regulations and a rise in the illegal act of stealing energy. By comprehending and resolving public apprehensions, the sector can attain enhanced stability and efficacy. A well designed and justified tariff structure has the potential to enhance the investment environment in the electricity industry, thereby attracting both domestic and foreign investors crucial for the advancement of infrastructure and enhancement of services.

Moreover, future academics will employ it as a comprehensive analysis of the existing literature. As a result, other students who are interested in studying this subject will have the chance to use this work as established information that can be thoroughly assessed. 

1.7 Scope of the study

Broadly, this study focus is to critically assess public perception to electricity tariff hikes in Nigeria (based on President Tinubu administration). Specifically, this study seeks to determine the extent increase in electricity tariff affects the general public under President Tinubu administration and identify the factors influencing public opinion on the tariff increase. 

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

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 public perception to electricity tariff hikes in Nigeria (based on President Tinubu administration). 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 Nigeria. 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.