• Economy loses N113b to Monday’s power shutdown
• NLC denies forcibly shutting down national grid
• OPS to employ legal provisions to protect enterprise sustainability
• Wage negotiation should be on principle of affordability, says Yusuf
• ‘Action undermines country’s economic survival’
• Strike may be suspended today as labour reps, govt resume parley
From aviation to power supply, seaport and public healthcare, Nigeria’s bleeding economy was brought to its knees yesterday as organised labour embarked on a nationwide industrial action to force the government to an acceptable compromise on the ongoing minimum wage negotiation.
The economy lost an estimated N113 billion to the shutdown of the national grid alone leaving the Transmission Company of Nigeria (TCN) struggling to restore power supply to homes and industries.
While power operators, especially the generation and distribution companies usually invoice about N4.4 billion in power daily, the implications for the larger economy, which is dependent on diesel and other fossil fuels to power their homes and businesses, according to the World Bank is about N113 billion.
According to World Bank estimates, power shortages in Nigeria cost the economy approximately $28 billion yearly, equivalent to two per cent of the country’s gross domestic product (GDP). If the figures from the bank are correct, the losses per day translate to $76.7 million for the country’s economy. Going by the official exchange rate of N1,475/$, the losses stand at N113 billion.
Nigerians were plunged into darkness in the early hours of Monday as the national grid crashed to zero generation following the enforcement of industrial action by the Nigerian Union of Electricity Employees (NUEE).
The Guardian gathered that the grid went down between 1 am and 2 am today. Initially, the grid dropped to about 2,805 megawatts at 1 am, then plummeted to approximately 1,000MW by 2 am and further to 28MW by 3 am before eventually reaching zero megawatts by 4 am. Although there are currently 16 power plants on the grid, most of the gas and hydropower plants have gone offline.
NUEE had mobilised its members to enforce the strike action called by the Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC), which began yesterday. Despite the power sector’s privatisation, TCN remains government-controlled and staffed by civil servants.
Information on the TCN Independent System Operator’s website, which controls the national grid from Osogbo in Osun state, showed no power on the grid as of 7 am. General Manager of Public Affairs at TCN, Ndidi Mbah, confirmed that the national grid shutdown occurred at about 2:19 am.
“At about 1:15 am this morning (yesterday), the Benin Transmission Operator under the Independent System Operations unit of TCN reported that all operators were driven away from the control room. Staff who resisted were beaten and some were wounded in the process. Without any form of control or supervision, the Benin Area Control Centre was brought to zero,” she said. She added that other transmission substations shut down by the Labour Union include the Ganmo, Benin, Ayede, Olorunsogo, Akangba, and Osogbo substations.
Mbah noted that power-generating units from various stations were forced to shut down some of their generating units. The Jebba Generating Station was forced to shut down one of its units, and three others in the same substation subsequently shut down due to very high frequency. The sudden forced load cuts led to high frequency and system instability, eventually causing the national grid to shut down at 2:19 am.
Industry stakeholders have expressed their dismay over the shutdown and emphasised the detrimental effects on the economy and public welfare, highlighting the critical role of a stable power supply in driving economic growth and development.
They mentioned that the grid shutdown has caused unprecedented disruptions, impacting not just businesses but also essential services such as healthcare.
Executive Director, PowerUp Nigeria, Adetayo Adegbemle, said the deliberate shutdown of the grid should be a treasonable offense, noting that the Labour leadership needs to grow up and devise other means and strategies of engaging with government, instead of shutting down the national grid.
He added that generation companies (GenCos) have committed funds to gas suppliers, private distribution companies (DisCos) are to distribute power generated but some saboteurs decided to play power tussle with private businesses, describing it as economic sabotage and treasonous.
“What did the Ministry of Power do to forestall this? Ministry of Information too is quiet, labour leadership should devise other means and strategies of engaging with the government by all means, strike, walk away from work, and let the government see how important you are to your job but not shut down the grid and expose millions of businesses and the economy, to your shenanigans,” he said.
Corroborating his view, Electricity Market Analyst, Lanre Elatuyi, described the grid shutdown as very ill-advised and uncalled for, noting that they can make their demands without putting the whole country in darkness knowing the importance of electricity in citizens’ daily lives.
“The demand by labour to reverse subsidy removal is the most ironical of their demands; it appears they don’t even know the implications of their demand on the minimum wage. Their actions are very wrong and the security agencies should have prevented this. The people that bear the brunt most are the ordinary Nigerians they claim they are fighting for,” he said.
However, the National Coordinator of the All Electricity Consumers Protection Forum, Adeola Samuel-Ilori mentioned that while it’s common to aim for a strike to have a significant impact, the question is whether the labour union is prepared to maintain it as part of their demands.
He pointed out that one of their demands is the reversal of the electricity tariff hike and questioned whether they would persist if the salary issues were resolved but the tariff remained unchanged. He stressed that while he finds their demands both ambiguous and ambitious, he is curious to see how long they can maintain pressure on the government before conceding and ending the strike.
Following the shutdown of the economy, the Organised Private Sector of Nigeria (OPSN) said employers would do all that is legally possible to protect enterprise sustainability and competitiveness within the framework of extant legislative provisions.
Speaking on behalf of the OPS, the Director-General of the Nigeria Employers’ Consultative Association (NECA), Adewale-Smatt Oyerinde, said it would in no small way, hurt those that organised labour was purportedly trying to protect.
He said it was no gainsaying that the current job creation capacity of organised businesses could not keep up with the current labour market entrants, with graduates churned out of higher institutions yearly.
He said the private sector would not be a party to any action or actions that would further compromise the survival of organised businesses, which would lead to more job losses.
According to him, while labour has the right to go on strike, it should not prevent legal business owners and Nigerians from going about their lawful duties.
“Employers will continue to do all that is legally possible to protect enterprise sustainability and competitiveness within the framework of extant legislative provisions,” he said.
Also, the Director-General of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the strike has disrupted the economic activities in the country, especially since the impact became very severe with the shutdown of the national grid, which meant that businesses had to resort to an alternative power supply to run their businesses.
He said that it was unfair to businesses because various businesses are already going through a lot in the economy and adding extra burden to them due to the strike was unfair.
The CPPE boss said the strike was going to affect their productivity and the prices of their products, as well as transportation as not many airlines can fly due to the obstruction of passengers. Noting that the payment of wages should be based on affordability and sustainability, he said many of the states’ payrolls take 80 per cent of their revenues.
For many small businesses, Yusuf said paying the kind of minimum wage proposed by labour is unrealistic because many of them are barely struggling.In his words: “Labour needs to be very realistic many of the state, local and federal governments are carrying a broad workforce.
“There should be equity. The resources of the government are not meant just for the payment of salaries. Those who are not on the payroll of government should also benefit from the resources. The state needs to provide infrastructure, schools and the need to support security.
“What has happened to the national grid is a national security issue and labour should not have shut it down. It is disproportional and not appropriate. Whatever labour does should be within the law no one is above the law. The body has the right to protest but other citizens should have the right to live. Nothing should be imposed on them.”
The Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Sola Obadimu, corroborated Yusuf’s position, saying the OPS had met already and advised that everyone should agree on what is feasible, practical and payable.
“We recommended N60,000 and agreed with the government but Labour rejected the figure. As it is, many private companies have declared heavy losses with many shutting down completely or staggering production from last year till now and this is without an increase in wages. We want workers to survive and earn survival wages, but no business can promise to pay what they know they cannot pay. OPS does not get subvention from the government and between last year and now, has been battling rising energy costs, rising input costs, poor infrastructure and insecurity among other problems. Production costs are stifling many businesses and asking them to pay what labour is asking for will spell the demise of many. Last year started badly with the cash crunch issue and since then, it has been from one issue to the other for the OPS.
“This would not be feasible for many companies and even the government itself as its revenue has not increased, government cannot pay N400,000 and neither can the OPS. If Labour is still insisting on that amount, government will simply print money and this would lead to massive inflation that will not favour anyone. We would quickly become like Zimbabwe and use a wheelbarrow filled with cash to buy a single loaf of bread. Prices would be so high that nobody would be able to afford anything again. We are asking Labour to be reasonable and come to a middle ground,” he said.
The NACCIMA DG however said Labour had a strong point when it said if the government should get rid of its many unnecessary appointees and extravagant spending it would be able to pay her workers the figure they are agitating for.
“If the wage is raised beyond what is reasonable, it is Naira and Nigerians that will be the ultimate victim in all this,” he said.On his part, the National Vice President, the Nigerian Association of Small Scale Industrialists (NASSI), S.T Kuti-George, said the ongoing strike has undoubtedly affected all businesses directly or indirectly as the economy is interwoven.
“Most MSMEs use raw materials and if those that supply it are on strike, it will affect production. We are not taking sides with anyone, but we recommend dialogue as the best approach. The strike is a double-edged sword; it doesn’t help anyone. There has been no power since last night and manufacturers and businesses have been forced to use generators, increasing the cost of production significantly and we don’t know how long this will continue. This is in addition to rising costs that they already have to grapple with daily.”
Some economists are unanimous on the plight of Nigerians but warned that the industrial action would further destroy the economy and scare away investors.
Prof. Jonathan Aremu, an economist, said “What the people want is not paper money, what they need is money that can meet their daily needs. Government should stabilise the exchange rate and bring down inflation. Farmers cannot go to their farms because of insecurity, the right thing to do is for the government to tackle insecurity so that farmers can produce more and that will bring down the cost of food and all these cries about minimum wage will end. Let us focus on getting macroeconomy right.”
Also speaking, Eze Onyekpere, a fiscal governance expert, said that the fact that the offices have been shut down and most of the services government and even the private sector rendered cut off means serious economic losses. He said the strike also provides an opportunity for the nation to focus on the state of the economy, noting that the Nigerian economy is in bad shape and cannot support any salary workers are paid.
“How can you run an economy the way we are running it and expect it to grow? The inflation is higher, the exchange rate is not stable, so any amount you pay to the workers will amount to nothing,” he said.
A professor of finance at the University of Nigeria Nsukka, Chuke Nwude, said the strike is a major setback for businesses, economic growth and investment opportunities.
According to him, the disruption in operations which is one of the most immediate effects would cause the production process to come to a halt. He pointed out that because business activities and consumer spending are directly linked to economic growth, prolonged strike action would aggravate the nation’s unemployment issues and rate of poverty.
Nwude noted that strikes could significantly damage a business’ reputation and disrupt its operations, potentially leading to financial losses, especially for businesses that deal in tangible products.
This can lead to delays in delivering products or services to customers, which can result in financial losses. If the strike is prolonged, the business may even have to shut down temporarily which would have a ripple effect on the supply chain, affecting other businesses as well.
A professor of economics at the Olabisi Onabanjo University Agoiwoye, Sheriffdeen Tella, investors may be reluctant to invest where there is an unstable or fragile labour relations environment and when this happens, businesses become stunted in growth.
“No shutdown is good for an economy. Not reaching an agreement in time has been affecting planning in the private sector before now as uncertainty created is not good for business. The government has been dragging its feet for too long and has been affecting old and new investments,” he said. Investment banker and stockbroker, Tajudeen Olayinka, described the strike action as the most unthinkable thing to do at this time.
According to him, to shut down the national grid in the name of the national strike is nothing but economic sabotage. Olayinka said the singular act could bring down the economy and worsen the already bad inflationary situation currently experiencing in Nigeria. He stressed the need for the government to take urgent steps to ameliorate the situation.”
Olayinka argued that the appropriate step to be taken at this time is to put pressure on the government to restore the economy to a sustainable equilibrium, and thereafter, fix a minimum wage, noting that it is inappropriate to use minimum wage requests to chase inflation.
“Inflation should be allowed to come down to the level of acceptable and affordable minimum wage. The labour can genuinely ask for a minimum wage that is affordable to the economy, and not make a request that will further drive inflationary pressure. Labour leaders should show more concern to all economic agents and avoid the route of odious sabotage,” he said.
Meanwhile, there are indications that the ongoing strike over the minimum wage may be suspended today as the government and labour meet in Abuja this morning. The scheduled meeting is the eighth since the tripartite committee was inaugurated by the Federal Government.
A letter of invitation by the committee sighted by The Guardian, yesterday, said: “I respectfully invite you to attend the 8th meeting of the Tripartite Committee on National Minimum Wage scheduled for Tuesday, June 4, 2024, at the Nicon Luxury Hotel, Area 11, Abuja. Time is 10.00 am prompt.”
For key stakeholders that may be away in Geneva, Switzerland for the ongoing International Labour Conference (ILC), the Secretary of the committee, Ekpo Nta, said provision for a Zoom link for virtual attendance has been made.Nta added that the minutes of the seventh meeting would be read and a draft agenda for the eighth meeting would then follow.
The Guardian checks showed that major offices including the national secretariat, the NNPCL towers, FCT secretariat in both Area One and Garki 2 were under lock and key as protesters prevented willing workers from accessing their offices.
The NLC has denied forcefully shutting down power in the country. Congress President, Joe Ajaero, stated the workers simply withdrew their services hence the collapse of power stations across Nigeria.
His words: “It is not true that anybody was manhandled by us in any TCN location. Maybe, TCN in its effort to scuttle the strike tried to force workers to be at work not realising the resolve of all workers to stay away. Why would the grid not go down when the workers who operate them decide to withdraw their service? That is how it works and further demonstrates that without workers, no wheel can turn; no work can take place anywhere.”
NLC claimed that it was informed that the TCN management has resorted to the use of the military in its effort to intimidate and harass workers, who are carrying out their lawful and democratic duties at various TCN plants around Nigeria. It then warned that the management of TCN would be held liable for any injury inflicted on any worker by their resort to the use of the powers of the military.
“It is also important that we inform TCN that deploying military men to its locations is a clear abuse and insult to the military especially in a democracy. We are sure that members of the military so misused by this deployment are not happy with the management and the authorities who have authorised the deployment,” it stated.
