The dire power situation in Nigeria has become a source of concern to many businesses that have seen their operating costs shoot up on a daily basis; BENJAMIN UMUTEME writes.
Yaro, as he is fondly called by his clients and neighbours alike, runs a barbing saloon in Jikwoyi Phase 3. The worsening power supply situation has steadily been affecting his business as he has resorted to using alternative power supply to do business.
“During the fuel scarcity, getting fuel at the official rate was very difficult for me. Most times I had to patronise the black market. When the scarcity ended power supply became very irregular, again forcing me to use ‘gen’ to work most of the time.
“Throughout last month (April), I could count on my finger tips the number of times that I used electricity. At a time, the national grid collapsed, which was the reason for the blackout.
“It has not been easy as it has really eaten into my profit because there is no day that I don’t buy two litres of fuel. How long will I continue in this kind of situation? How can any business grow in this way,” he said.
He is not alone in this situation. Millions of small businesses are struggling to survive the strangulating effect of irregular power supply.
The privatisation of Power Holding Company of Nigeria (PHCN) which took place in November 2013 and involved the unbundling of PHCN and privatisation of the power generation companies (GENCOs) and distribution companies (DISCOs) was received with much hope by Nigerians, especially with the epileptic services rendered by the defunct PHCN. However, almost ten years later, nothing much seems to have changed with some Nigerians arguing that the situation has gotten worse under privatisation.
Huge debt and equity servicing challenges, dearth of new investments, poor credit rating and poor business viability image to investors, shortage of gas supply for thermal plants, high levels of unpaid electricity bills and the country’s outdated and poorly maintained transmission network, have all combined to make the power supply a huge challenge for Nigerians.
National grid collapse
On April 9, 2022, Nigerians woke up to the news that the blackout that was being experienced across the country was caused by the collapse of the national grid.
The federal government said the collapse was caused by “vandalism” on a transmission tower on the Odukpani – Ikot Ekpene 330kV double circuit transmission line, leading to a loss of about 400MW of generation.
According to a statement on Twitter by Isa Sanusi, the spokesperson to the Minister of Power, Abubakar Aliyu, it led to a cascade of plants being shut down across the country.
The power plants affected by that singular act of vandalism included the recently upgraded Okpai and Alam IV power plants, which combined contribute 400 megawatts of electricity to the grid.
The latest collapse is the fifth time in 2022 that the national power grid would collapse.
“Please be informed that there has just been a national grid collapse causing an outage in our franchise areas. We apologize for the inconvenience caused and appeal that you bear with us while we await restoration from the TCN. We regret all inconvenience caused,” the Abuja Electricity Distribution Company (AEDC) stated in a statement.
“Dear customers, there was a loss of supply as a result of the system collapse of the Transmission Company of Nigeria (TCN) about 6:30 p.m. across all our franchise states of Bauchi, Benue, Gombe and Plateau,” Jos Electricity Distribution Company said.
Lamentations
Efe, who runs a fashion shop at Apo fish market in the Federal Capital Territory, told this reporter that meeting demand of customers has been very difficult.
According to him, alternating between electric power and generating sets has not been easy.
He said, “Each time I tell some of my customers that I have been running at a loss since the fuel scarcity period, they don’t take me seriously but the truth is that I have to bear the expenses so as to keep my customers, some of whom have been patronising me for over a decade.
“It’s only recently that I have been getting fuel at the filling station, since the beginning of this year, it has been from black market, and everyday I spend about N1000 for fuel. When you add the N10000 I use to recharge my meter, you will understand what I am saying. “
According to the World Bank, the economic cost of power shortages in Nigeria is estimated at around $29 billion. The figure is equivalent to two per cent of Nigeria’s Gross Domestic Product (GDP). The Bank says that about 47 per cent of Nigerians do not have access to grid electricity and those who do have access, face regular power cuts.
A PricewaterhouseCoopers (PwC) report published in June revealed that electricity accounts for the biggest costs to daily operations for many small and medium scale businesses in Nigeria. The report, titled “PwC’s MSME Survey 2020 – Building to last”, stated that Nigeria’s power sector is “overwhelmed by a myriad of challenges ranging from operational inefficiencies to infrastructure deficiencies”. These challenges have resulted in inadequate electricity supply that has had an adverse impact on the business environment in Nigeria.
In its analysis of the economic factor intensity as a result of the shortfall of low electricity supply, PwC said that “approximately 1 out of every 7 firm” exits the Nigerian economy because of power concerns.
According to the 2020 Doing Business report, getting access to electricity ranks as one of the major constraints for the private sector in Nigeria. While big companies operating on big budgets and debt financing can afford to seek alternative means of power through off-grid energy sources, small businesses operating on shoe-string budgets are left at the mercy of Nigerian electricity operators.
Narrating his experience, Emeka, a cobbler based in Nyanya, a suburb of the FCT, said he had to reject several jobs because of the unpredictable power situation.
He said for about two months, the light situation has been ‘terrible’.
“As it is at the moment, I am planning to buy another generator because the one I have has started giving me problems due to overuse. Some of my customers have had to go elsewhere because I have not been able to deliver as planned because there is no electricity to operate my machine,” he said.
For Victoria who runs a pure water factory in Lagos, switching to alternative supply through generators has shut up her operating cost.
“We now spend an average of N30, 000 on fuel monthly. This affects our balance sheet, but we have no option. Our shop employs over 10 boys but we now have six, due to high operation cost. But even at that, the amount is minimal compared to when we paid for estimated bills and still bought fuel of about N20, 000 monthly,” she said.
In his reaction, the World Bank Country Director for Nigeria, Shubham Chaudhuri, “The lack of reliable power has stifled economic activity and private investment and job creation, which is ultimately what is needed to lift 100 million Nigerians out of poverty.”
