CALCULATION: How Minimum Wage Earners Spent 57% of Salary — Report ReveaIs

A new report reveals that a minimum wage earner in Nigeria spends 57.3% of their salary on electricity if they use seven essential household appliances for a month.

A minimum wage earner spends at least 57.3% of their salary on electricity bills if they use only seven appliances for a month, an FIJ calculation shows.

The federal government announced in September that it would start paying its proposed N70,000 minimum wage, it would also pay civil servants the arrears from July and August.

While this wage increase is a good development for workers, the cost of living may render the wage increase almost insignificant. This report spotlights the cost of electricity alone and its impact on workers’ wages.

According to a National Income, Salaries and Wages Commission (NISWC) document, civil servants under the Consolidated Public Service Salary Structure would earn N930,000 per annum. This means that a minimum wage earner would go home with around N77,500 monthly.

On the other hand, the Nigerian Electricity Regulatory Commission (NERC) announced a 300% increase in electricity tariff for those in the Band A service category in April.

Musliu Oseni, Vice Chairman of the NERC, said that the tariff hike meant that customers who formerly paid N66 per kilowatt hour would pay N225 for the same unit of electricity.

In the announcement, the NERC also said that only users in the band A service category (about 15% of the entire customer population) would be affected.

A few months after this announcement, Nigerians have decried their unsolicited transfer to the Band A service category without prior notice. Some of them protested this move as captured in this report by FIJ while others took to social media to lament.

“I have confirmation that @aedcelectricity has now put me in Band A with no notice at all. So, N100,000 electricity top-up now lasts just seven days. I have been paying. Who has a gadget that can help me monitor whether I am getting a minimum of 20 hours of light a day, please?” Joe Abah, a financial expert, posted on X.

“How can you want to squeeze us to pay such (a) ridiculous tariff? And switching us to Band A without notice?” @morakcares also posted on the microblogging platform.

THE COMPLAINTS ARE LEGITIMATE. ELECTRICITY BILLS ARE COSTLY FOR MINIMUM WAGE EARNERS

To understand the chokehold of electricity tariffs on minimum wage earners, there is the need to know how power usage is measured, and then analyse it against the power consumption rate of an average minimum wage earner.

For starters, the NERC and distribution companies (DisCos) measure power in kilowatts hours (kWh). A kilowatt-hour is a unit for measuring energy that tells how much power is used over time. If a device takes 1 kilowatt for one hour, it consumes an estimated 1 kilowatt-hour of energy (1 kWh) after one hour of use. In another case, if an electronic device consumes 2 kW every hour for three hours, it would have consumed 6 kWh of energy.

Electricity supply under the Eko Distribution Company (EKEDC), for instance, is classified under electricity tariffs and bands as follows: Band A, B, C, D and E. The average charges for these band services as seen on their website are N209.5 per kWh, N64.07 per kWh, N50 per kWh, N42.8 per kWh and N39.6 per kWh respectively.

While there is no readily available data to measure the average amount of electricity Nigerian households consume monthly, FIJ created a hypothetical scenario of possible power consumption levels of a minimum wage earner using seven essential appliances in a month.

• Three Binatone standing fans: Each fan has a capacity of 70 watts. Each would consume 0.07 kilowatts in an hour. Three of the same capacity will consume 0.21 kilowatts in the same hour, 2.1 kilowatts in ten hours, and 63 kWh in 30 days.
• LG 32-inch LED TV: Typically has a 50-watt capacity. It will consume 0.05 kilowatts in an hour. In 8 hours, it will consume 0.4 kWh, 12 kWh in 30 days.
• Philips pressing iron: has a 1000-watt capacity. In an hour, it would consume 1 kilowatt. If the same runs for 2 hours daily for the whole month, it would consume roughly 60 kWh in 30 days.
• 5 AKT LED bulbs: Each with a 5-watt power running for 20 hours would consume 0.5 kWh. Running that same capacity steadily for 30 days would have used up 15 kWh of electricity.
• Haier Thermocool washing machine: It has a capacity of 72 watts. If this machine is used for two hours every three days, it would consume 0.144 kWh. The usage would be about 1.44 kWh in a month.
• Interdab water pump: This particular device has a 370-watt capacity. With that capacity, it would use 0.74 kWh daily for a two-hour pump time. That would be 22.2 kWh in a month.
• Haier Thermocool refrigerator: For a fridge that has a 200 watts-power capacity like this one, it would use 1.2 kWh of energy in six hours. In 30 days, it would consume 36 kWh of power.

The aggregated unit of power consumption of an average home restricted to the appliances in the table above would be 212 kWh for a month.

If the figures put up by EKEDC are taken into account, minimum wage earners who find themselves in the Band A service category would spend N44,414 of their N77,500 pay. This means that a minimum wage earner would lose 57.3% of their salary to power alone.

For Band B, C, D and E customers, they will spend 17.5%, 13.67%, 11.70% and 10.83% of their N77,500 respectively on monthly electricity bills.

Minimum wage earners who own more electrical appliances or use the same appliances for longer hours will pay more than 57.3% of their salaries on electricity bills on Band A.