How High Cost of Energy Cripples SMEs


The present poor power supply has taken its toll on the operators of Small and Medium Enterprises (SMEs), the Daily Trust has gathered. The businesses ranging from barbers’ shops to industries are at their wits end due to major challenges of power supply.

 An energy expert, Mr. Musa Akoh, said three things happened this year which have impacted badly on the growth of small businesses.

“The first was the increase in electricity tariff in February this year. The about 60 per cent increment was actually at the detriment of small business owners who cannot even increase their products prices for fear of losing customers.

“While the effect lingers, the federal government hiked the price of fuel to N145 per litre in May. This challenge definitely has increased their cost of doing business especially in fuelling their generators. The third is the on-going poor power supply with generation less than 3,000mw this week. These are not good indices for business growth,” Mr. Akoh explained.

Temitope David is a publisher and prints as well. He says the cost of doing business has increased greatly because he is spending so much on petrol. “For instance, if we buy 25 litres of petrol before you know it, it’s finished. Our cost of doing business has gone so high and we cannot increase the cost of services, because people are saying there is no money,” David said. For David Samuel, a staff Josmed Computer Centre and Cyber cafe, Utako, the story is not different. “Sometimes, from morning till night, there will be no light. Sometimes, we use the profit we make the previous day to buy fuel the following day. Yesterday, I had to borrow money to buy fuel, because we did not have enough money. Can you imagine that I bought fuel for 3000, and I made 1,800? This is not good for this business, “Samuel lamented

Samuel said if government improved on power supply, the SME would not need to buy petrol for generators.

“If they know the cost of fuel cannot come down, then they should improve the electricity supply. Let there be steady power supply. If there is light constantly, there will not be need to buy fuel, Samuel said.

 Emmanuel Adeniyi, the Manager of Modan Associate Limited says government should improve on power supply to ease the burden of business owners getting their own source of power supply.

“Government should do everything it can to improve power supply. If government is ready to improve electricity supply, Nigerians are ready to work and more businesses will spring up,” Adeniyi said.

On what government officials in the power industry are doing to support the growth of SMEs, an official at the Federal Ministry of Power, Works and Housing said government is helpless in the face of vandalism of gas to power assets.

He said government has fast tracked dialogue process with aggrieved parties to stop the vandalism and improve power supply adding that if power generation is consistent at over 5,000mw, the SMEs will have better supply of almost 18 to 22 hours daily to drive their operations.

The Abuja Electricity Distribution Company (AEDC) is directly involved in collecting energy bills from the SMEs rated as ‘Commercial’ class customers in Abuja and three other states. Quite a number of small firm owners have frowned at the continual payment of bills without corresponding power supply.

But the Managing Director of AEDC, Mr. Ernest Mupwaya who paid a courtesy visit to Daily Trust yesterday said electricity tariff would come down in the long run when the company achieved its massive metering scheme and reduce energy and collection losses to less than 20 per cent.

Presently, the power supply Industry faces insufficient energy and the Disco receives less allocation from the Transmission Company of Nigeria (TCN) than the capacity it should supply to its customers, Mupwaya explained.


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