The removal of electricity subsidy can have significant effects on both consumers and the economy. While subsidies are often put in place to make electricity more affordable for consumers, their removal can lead to an increase in electricity prices, and massive job losses.
It can also result in higher costs for households and businesses, potentially leading to a decrease in disposable income and an increase in production costs. Industries that rely heavily on electricity for their operations may be hit hardest by the increase in prices.
Additionally, higher electricity prices can lead to inflationary pressures, affecting the cost of living for all consumers.
On the other hand, electricity subsidy removal can also have benefits. It can encourage more efficient use of electricity and promote the development of renewable energy sources.
Most times, subsidy removal is aimed to attract more investments in the energy sector. Perhaps this is what Nigeria wants to achieve as it starts the dangerous journey of removing subsidy in electricity supply to her people. Will the anticipated investments come? Well, time will tell.
By removing subsidies, consumers may be incentivized to conserve energy and invest in energy-saving technologies. Doing this can lead to improving and sustaining the energy sector in the long run.
Overall, the effect of removing electricity subsidies is complex and multifaceted. While it may lead to short-term challenges for consumers and the economy, it can also spur innovation and promote investments and sustainability in the long run.
Policymakers must carefully consider these factors when deciding whether to remove electricity subsidies by implementing measures to mitigate any negative impacts on vulnerable groups.
The aspect of been careful is where the nation of Nigeria is currently failing and failing woefully.
Such considerations should be made around some realities. For instance, before the removal, does the nation have available electricity? Was the availability affordable? The availability and affordability of energy are the two key drivers of the manufacturing industry of any nation.
A nation like Nigeria, that is almost solely dependent on importation, would nearly-kill her lean manufacturing industry if electricity subsidy is removed, especially as alternative energy sources to electricity are nearly unavailable.
For instance, Nigeria manufacturing industry relies heavily on diesel power to be onboard, yet diesel is very expensive, going for about $1/liter.
An average manufacturing facility in Nigeria needs about 700 liters to power its plant per day.
Aside other logistics- that need diesel to thrive- like transportation, security and administrative operations, how can a manufacturer or service provider, like hotel, survive on a daily energy supply cost of $700? This is near impossible.
Subsidized electricity is indeed the life wire of manufacturing industry in a strained nation like Nigeria. Now both the diesel and electricity subsidies are gone and scanty supplies are now extremely expensive. Homes are thrown into darkness, streets are thrown into darkness, services are grounded, manufacturing plants are shutting down, and of course, jobs are lost in millions- in a nation with massive job deficit- and the situation is spilling out of control.
The question now is, what exactly is the Cabinet Member in-charge of electricity thinking? Reports are that most parts of the nation, for the past 3 months, have had electricity for only 3 hours in a whole week. In some areas, for a whole week, there would be no electricity.
It is therefore preposterous that this Cabinet Minister is still allowed to retain in office, else it would count to awarding administrative and ministerial failure.
The solution to save the situation is in 3 folds, name: (1) with immediate effect, return the electricity subsidy, (2) within 30 days, provide electricity meters in all households in Nigeria, to end loss-supplies, get local refinery back on track- to ensure affordable fuel supply, and (3) then reconsider removing the electricity subsidy.
Other than these steps, it will become near impossible for the West African country to survive the economic and social turbulence, even in two decades from now.
