Electricity tariff charges which are mainly determined by foreign exchange rates and inflation have joined the list of items gearing up for an increase from July 1, 2023, as the country faces fresh hurdles with the new administration’s policy implementation.
The organised private sector which comprises manufacturers and small businesses has predicted a more disturbing future as the whole development may put a toll on their daily activities.
The Director of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, who spoke with The Sun countered the FG's decision to implement the changes in energy tax at the moment.
Yusuf said the action of the FG to introduce taxes on energy came at the wrong time since the deregulation of the PMS industry and unification of the exchange rate just happened recently.
In his opinion, the FG should have allowed the new reforms to settle and take effect first before starting off on implementing new ones.
“Although diesel and some other petroleum products have been deregulated, this is not a good time to reintroduce taxes or duties on energy as the government just removed the subsidy on fuel,” he said.
The introduction of a 7.5% VAT on the price of Premium Motor Spirit, (PMS) otherwise known as petrol is also an after-effect of the subsidy removal by President Bola Tinubu.
The Finance Act 2020 which was implemented on February 20, 2020, had authorised raising the earlier charged 5% VAT to 7.5% on commodities which include automobile gas oil.
PMS was exempted from the VAT-compliant list since it was still being subsidised by the Federal Government but with the removal of the subsidy, consumers now have to part with an extra charge for VAT.
The energy sector will as well witness a 40% increment in electricity tariff as the FG also plans to eventually end all forms of energy subsidy in the country. The average cost of electricity which currently stands at ₦64 per kilowatt is expected to jump by at least, 30% by June ending with rising inflation.
According to Business Insider Africa, there are expectations that the new bill which is expected to kick in from July 1, 2023, may take the new tariff to around ₦88 per kilowatt.