The Institute of Chartered Accountants of Nigeria (ICAN) has recommended that the National Energy Regulatory Commission (NERC) and the Discos should defer the implementation of a rate increase to a future period.
According to ICAN’s press release issued on Thursday 27th July, the president of the institute Dr. Innocent Okwuosa, explained that Nigerians are still grappling with the effect of macroeconomic policy decisions such as the removal of petrol subsidy and unification of the foreign exchange rates. The proposed increases at this time would further worsen the plight of the masses and push more Nigerians into multi-dimensional poverty.
Okwuosa, added that the increase would significantly increase the cost of doing business in Nigeria,
particularly for SMEs. These he believed that the enterprises may be unable to pass on the additional costs to their customers, increasing the risk of business closures, and further worsening the unemployment rate.
He further urged that both government and NERC should consider additional short-term tax breaks and other incentives to the Discos, as a form of production-focused subsidy (rather than consumption-focused subsidy), as an alternative to rate hike; stressing that the Discos would however need to demonstrate better accountability and transparency in governance and reporting. While also enjoining that the Discos should invest further in their distribution network to reduce technical losses and build a platform for sustainable electricity distribution.
It may be recalled that the electricity distribution companies have proposed an upward review of the electricity tariff recently which has left many in doubt of the Renewed Hope agenda of the new administration.
