Further Hike In Electricity Tariff Will Stifle Businesses-MSME Operators

Small Business owners following the recent attempt to increase the electricity tariff have decried the possible impact of the tariff hike on their businesses, saying that it will reduce their profitability.

The Nigerian Electricity Regulatory Commission had said that in compliance with the provisions of the nation’s tariff methodology for biannual minor review, it adjusted the rates for service bands A, B, C, D and E by N2.00 to N4.00 per kWh to reflect the partial impact of inflation and movement in foreign exchange.   

However, the Federal government through the Minister of Power, Saleh Mamman, reversed the tariffs that were applicable in December 2020 until the end of January 2021 when the Federal Government and Labour committee work will be concluded. 

“This will allow for the outcome of all resolutions from the Committee to be implemented together,” he said.

The Minister explained that the government had continued to subsidise 55 percent of on-grid consumers in bands D and E and maintain the lifeline tariff for the poor and underprivileged.

He added that the role of the government was not to set tariffs, but to provide policy guidance and an enabling environment for the regulator to protect consumers and for investors to engage directly with consumers.

The WHISTLER findings showed that most Micro, Small and Medium Enterprises are still struggling to survive the impact of the Covid-19 on their level of income, business operation and customer base, which may be heightened by the electricity tariff.

For Tunji Oba, a Welding Technician, coping with an additional cost from the electricity tariff hike will be unbearable as business for him has not been the same since the Covid-19 outbreak.

Oba in a chat with THE WHISTLER said that there had been a decrease in his customer base, adding that this has led to constant struggle to keep up with daily expenses in the shop.

“I am not sure I can pay more money for electricity than I am paying now because business has not been the same since this Covid-19 issue started, and I have spent so much to repair and replace most of my tools.

“My Prayer is that as we begin this new year, business and life in general should just come back to normal, so that i can be having contracts like before. “

He expressed dissatisfaction with the decision of the government to increase electricity tariff, stating that the tariff will not benefit businesses, but rather reduce their profits, especially micro, small and medium scale businesses.

According to him, an increase in tariff will increase the cost of operation for most business owners, which will in turn affect the prices of products and services rendered to consumers. 

He added, “For businesses that use electricity very well like ours, some may be forced to even shut down their businesses. Why won’t this government just come up with what will make us better and help us grow our business?  

“We want the government to assist us in growing our business, not adding to the cost we are currently trying to cope with.”

For Auwal Aisha, a hair stylist at Lokogoma axis of Abuja, she lamented the difficulty of keeping up with the cost of running her shop, adding that she is trying to keep expenses at a minimum.

She said, “This electricity tariff increase will not be easy at all. We currently do not have the prepaid meter and the bills we pay is always high, that was why I bought this generator.

“This work has not really been profitable for us for some time now, our customers do not come as before since the covid-19 outbreak. So this government should not make things worse than this. Even the generator I have, buying fuel is not easy.”