Persistent energy crisis in Nigeria has dealt a severe blow to industries, causing shutdowns, hampering productivity and escalating operational expenses. In this report, Daily Trust Saturday writes on the root causes of the power supply woes and the impact of escalating fuel costs on businesses in Nigeria.
Nigerians are facing a dire economic situation as businesses across the country grapple with the twin challenges of unreliable power supply and skyrocketing fuel costs.

Nigeria’s power supply has long been plagued by inefficiency and chronic underinvestment, an expert said.

And despite being Africa’s largest economy, Nigeria’s power generation and distribution infrastructure remain inadequate and unreliable.


In recent times, frequent blackouts and power outages amid high tariffs have become a routine part of life for businesses, disrupting production schedules, leading to losses, and making it difficult to meet consumer demands.

This is further compounded by the recent hike in the cost of petrol that is now beyond the reach of average Nigerians.

Those who spoke to our correspondents said Nigeria stood at a critical crossroads, with businesses shutting down due to poor power supply and the relentless surge in fuel costs.

They said the impact on the economy and the lives of ordinary citizens was severe and required immediate attention.
They also said that to secure a brighter future for Nigerian businesses and the overall economy, concerted efforts from the government, private sector and international stakeholders were needed to address the energy crisis and chart a path towards sustainable growth and development.

“There is nowhere in the world where there is no subsidy,” said Umar Mohammed, an economist who works in a multi-national company in the United States.
“The reason why small and medium enterprises are collapsing in Nigeria is that there is no subsidy for them at all. They pay for light through their noses, and in most cases, electricity is not even available and they have to use diesel or petrol. Nigerians must also provide their own security for their business premises. Above all, they pay multiple taxes.

“This is not the case elsewhere. I have worked in at least four countries – Germany, Russia and the United Arab Emirate (UAE) and the difference is clear. Governments provide the enabling environment, constant electricity with various options, all in an effort to make people live a fulfilling life,” he said.

In the last two months, the cost of a litre of petrol in Nigeria has jumped from N195 to N617 without commensurate increase in the income of the citizens.

In many parts of the country, residents rarely get up to 12 hours of electricity, even as some communities live for days in darkness, with only few capable of buying petrol or diesel.
Amid power outages and crippling business opportunities, the House of Representatives had to wade in few days ago and called on the Nigeria Electricity Regulatory Commission (NERC) to put a stop to the planned increase in electricity tariff for now.

Distribution companies (DisCos) recently alerted customers of a planned electricity tariff hike, which was hinged on the Multi-Year Tariff Oder (MYTO).

Assuming they had their way, previous exchange rate of N 441/$1 would be revised to approximately N750/$1, which would have an impact on the tariffs associated with electricity consumption.

It was gathered that under the planned hike, consumers within ‘B’ and ‘C’ with supply hours ranging from 12–16 hours per day would pay N100 per KWh, while Bands ‘A’ with 20 hours and above and ‘B’ with 16 to 20 hours would experience comparatively higher tariffs.

At present, the Multi-Year Tariff Order (MYTO – 2022) approved by the NERC to run from 2022 to 2026, consumers who were paying about N16 per kilowatt an hour in 2015 now pay about N55, while maximum demand customers under band A, who were expected to enjoy electricity for 20 hours per day are paying about N71 to N80 for one kilowatt per hour.
Small and medium enterprises, which form the backbone of Nigeria’s economy, have been particularly vulnerable.

Continuous power disruptions force businesses to turn to expensive alternative power sources, such as diesel generators to maintain operations.

However, running generators comes with exorbitant costs, and many businesses are unable to bear this financial burden.

As a result, several businesses have been forced to shut down or scale back their operations, leading to significant job losses and reduced economic growth.

We’ll soon be forced out of business – SMEs

Inuwa Muhammad who sells soft drinks in Kano said he closed his shop due to lack of electricity and cannot afford powering his refrigerators with generators.
He said, “My capital is not more than N200,000 and what I am getting from the business cannot sustain it if I use a generator to power the refrigerators. And people will not buy if it is not cold.”

The pain of Abubakar Muhammad, a taxi driver, is also connected to the hike in the price of petrol, which made him sell off his vehicle.

He said he could no longer bear the cost of maintenance and buying petrol while there are fewer passengers on the road.

Ado Mai-Kayanmiya, a popular vendor of perishable food items in Hotoro, Kano, recently put a pause on his business on the ground of hike in the price of the items as a ripple effect of the cost of transportation.

“I have no choice than to halt everything and stop selling pending when things will stabilise. People are complaining every day that things are getting more costly,” he said.
In Jos, Plateau State, some business owners who spoke with Daily Trust Saturday said they were in dilemma as a result of epileptic power supply and petrol hike, which have led to skeletal operations, low patronage and gradual shutdown.

A businessman, Philip Galadima, who is into dry-cleaning service in the Rukuba road area of Jos, said that since the fuel subsidy removal started, things had been very difficult for him.

While the cost of production has increased, he is also battling low patronage.

An Irish potato seller, Faruq Rabilu, who purchased the product from Bokkos Mangu, Barkin Ladi, among other villages, said fuel subsidy removal had seriously affected his business.

“It has led to an increase in transportation, which has directly impacted on everything along the business value chain,” he said.

Malam Abubakar Yuguda, who runs a tailoring shop at Gombe Old Market for the past 15 years, said that despite opening daily for business, he had not made five sets of clothes in the past two months owing to poor power supply and high cost of living.
He said most of his customers stopped patronising him when he increased his rate in response to the hike in petrol price.

Daily Trust Saturday observed that the story is the same for most of the tailors in that area of the market where Malam Yuguda operates his shops.

One of the tailors, Habibu Shuaibu said, “We are now in a dilemma because when we charge higher we will lose our customers. At the same time, we cannot afford to run the sewing machines on generators and still make profit.”

Our correspondent reports that apart from tailors, other people affected by the removal of subsidy and poor power supply are those who run commercial phone charging outlets.

Babangida Adamu, who runs his business at the Bomala area of Gombe metropolis, said he had closed his shop.
Investigation by our correspondent revealed that businesses are closing shops in Zaria, Kaduna State while others are running at a loss.

Aliyu Shehu, 28, who operates a barbing saloon said, “We run at a loss because of the high cost of fuel; but then, if I abandon the business, how do I feed my wife and two children? That’s why, no matter what, I just have to manage and stay in business,” he said.

Also, the managing director of Countryside Communications Limited, Mr Johnson Okanlawon, which offers in computer services and agent banking, lamented the difficulties in running his business in Lagos because of the fuel price increase and shortage of power supply.

According to him, the hike in fuel price is hurting the business, saying, “I make photocopies, spiral-binding and lamination, among other things that require constant power supply to thrive.”

He said he recently changed to a gas-enabled generator to reduce the cost of buying petrol to power his business.
“When I discovered that the cost of buying fuel to power my generators was killing, I changed to a gas-enabled generator last Monday, and that’s good for me because the gas is now cheaper and lasts longer,” Okanlawon said.

A welder at Mafoluku, Oshodi in Lagos, who introduced himself as Uncle Wale Welder, told Daily Trust Saturday that the twin calamity of irregular power supply and the rising cost of fuel in the country were gradually pushing him away from making ends meet.

Uncle Wale said the price hike had increased his operational cost and squeezed profit margin. “As machine operators, we rely heavily on power, but as fuel prices rise, our daily operational expenses also rise.”

Corroborating Uncle Wale on how the hike in pump price of fuel and irregular power supply are taking a toll on their businesses, a hair-dressing salon owner, Ayo Omo-Ade, told this newspaper that irregular power supply and expensive fuel had limited her working hours because of the cost implications.
Lady Omo-Ade said she closed her shops earlier than usual in this era of increased prices of fuel and abnormal power supply for her business to thrive.

She noted that power outages during hairdressing processes led to interruptions and inconsistent service quality.

“This may affect customers’ satisfaction and retention, which in return is potentially impacting our client base and reputation,” Omo-Ade said.

Source: https://dailytrust.com/how-businesses-are-shutting-down-due-to-poor-power-supply-cost-of-fuel/

Businesses of those who voted for PDP and LP.
For sure, voters of the evil APC remain immuned to whatever others are passing through.

AroOkigbo:
Businesses of those who voted for PDP and LP.
For sure, voters of the evil APC remain immuned to whatever others are passing through.

They are not immuned, just smart enough to know that a failed state governor has no chance of becoming a successful president.

According to protagonists of the ruling party, we all have no reasons to complain because Tinubu met a rotten economy and would need time to fix it.

Now that they have finally repented from heaping the blames of their party's failure on PDP's 16years of governance, and realising that blaming Buhari would be tantamount to exposing their lack of proper judgement and repulsive display of idiocy, they have graduated to blaming us the masses, for being impatient, impertinent and insufferable, claiming that Tinubu has the midas touch but in the same vein, making a case that 2 months are not enough for the man to have made at least one sound policy with an immediate positive effect to alleviate the sufferings of the people.

Nigeria's problems transcends the insensitivity and corruption of the ruling class. Our failings are embodied in the mindsets of the tribalistic minority, the odious rhetorics and actions of the religious extremists and the intolerable nuances of the gullible lot.

A nation with a thick-headed citizenry can best be administered by the firm grasp of brutal faces like those of Sani Abacha and Chief Olusegun Obasanjo.

“There is nowhere in the world where there is no subsidy,” said Umar Mohammed, an economist who works in a multi-national company in the United States.
“The reason why small and medium enterprises are collapsing in Nigeria is that there is no subsidy for them at all. They pay for light through their noses, and in most cases, electricity is not even available and they have to use diesel or petrol. Nigerians must also provide their own security for their business premises. Above all, they pay multiple taxes.

“This is not the case elsewhere. I have worked in at least four countries – Germany, Russia and the United Arab Emirate (UAE) and the difference is clear. Governments provide the enabling environment, constant electricity with various options, all in an effort to make people live a fulfilling life,” he said.

Correct talk. Every serious nation has subsidy to maintain competitive edge.

Can’t they convert their generator to CNG and buy it at N150 per litre ?

Ebubu3:
Can’t they convert their generator to CNG and buy it at N150 per litre ?

CNG isn't N150/litre. It around N600/kg

This is what happens when leaders lack vision.

This simple plan could have solved the problem.

1. Let's government invest in gas stations around the country or encourage private organization to invest in it.

2. Ensure that Nigeria is self sufficient in CNG, LPG, etc. Huge fines for oil company still flaring gas

3. Invest in public transport system, trains that link cities in same states and two more states.

4. Invest in generation of electricity. At least 40,000 megawatts to be added in national grid within 4 years.

5. Tighten the security around the border. Drone surveillance can help track smuggling of petrol products. Stiff penalties for corrupt custom officials.

6. Gradual removal of petrol subsidy as people switch to gas.


To show you how Nigeria is performing badly, take a look at Egypt.

Egypt has a population of 109 million. Nigeria is estimated to have twice the population of Egypt.
Egypt generates almost 60,000 megawatts. Nigeria is generating 5,000 megawatts, which is less than 10% of what Egypt generates.

If not for the distraction of state sponsored criminals parading as secessionists, Igbos have what it takes to seize control of the economy now.

I pray Barth Nnaji completes Geometric ASAP and with Alex Otti, Aba will become great. A city with the largest concentration of SME's in West Africa will do wonders once there is 24/7 power supply.

I really pity Northern Nigeria most. Kano and Kaduna used to be production centers with huge industries. Today, Kaduna industrial sector is almost entirely dead. Kano too has been retrogressing rapidly and now that fuel will be much cheaper in South than North, coupled with high electricity tariff and low purchasing power in the region, the few remaining industries in Kano would have no choice to relocate their production centers in the South or close shop due to stiff competition from brands in the South that will leverage the advantages there.

The future is really gloomy for the North because they failed to leverage economies of scale in areas where they have advantage.

CodeTemplar:
CNG isn't N150/litre. It around N600/kg

LPG nko

Balablu economics says you take from the poor to fund the rich then you give the poor pittance to keep them loyal to you.
Just look at their suffering and smiling Zombies(8k) and compare them to the chopping and smiling politicians(70bn) and you'll see what I'm saying.

ElSudani:


They are not immuned, just smart enough to know that a failed state governor has no chance of becoming a successful president.

A "successful" state governor is the president and Businesses are closing. No be juju be that?

a4cube:
A "successful" state governor is the president and Businesses are closing. No be juju be that?

He is two months into a four years tenure. Aren't you a little too hasty?

ElSudani:


He is two months into a four years tenure. Aren't you a little too hasty?

Two months into 4 Yr tenure and people are suffering like this. This is what you guys said during the last dullard rule and the suffer continued for 8 years. Now someone that promised to continue where the dullard stopped has multiplied the sufferness and you are still giving excuses. Be aware that excuse industries produces nothing.

a4cube:
Two months into 4 Yr tenure and people are suffering like this. This is what you guys said during the last dullard rule and the suffer continued for 8 years. Now someone that promised to continue where the dullard stopped has multiplied the sufferness and you are still giving excuses. Be aware that excuse industries produces nothing.

Where was your outrage a few months back when you all supported Emefiele thinking his graveyard monetary policy will help you in the polls?
You are doing the same thing now by blowing the subsidy removal out of proportion and try to score another political goal.
Tinubu is taking the right steps to reposition the economy. That is the most important thing.
If you think he is doing it the wrong way then you are free to tell us how and what you would have done differently.

ElSudani:


He is two months into a four years tenure. Aren't you a little too hasty?

2 months is enough to make policies that are killing the economy but it's too short to make at least one that'll ease the people's pains? It is well

ElSudani:


Where was your outrage a few months back when you all supported Emefiele thinking his graveyard monetary policy will help you in the polls?
You are doing the same thing now by blowing the subsidy removal out of proportion and try to score another political goal.
Tinubu is taking the right steps to reposition the economy. That is the most important thing.
If you think he is doing it the wrong way then you are free to tell us how and what you would have done differently.

The right step he fought some years back, you guys are funny. Your Bubu, friend to Tinubu is the one Emefiele was working for. So how does that concern ordinary me? Right steps that is closing the few industries and SMES? I thought right steps will bring bounty harvest but the reverse is the case here.