Power crisis returns, hits businesses, households

The earlier improvement in electricity supply across the country a few weeks after President Muhammadu Buhari assumed office has slumped, with businesses spending heavily on alternative energy sources like in the pre-Buhari days.

Power supply improved immediately after Buhari’s assumption of office and many attributed it to the new president’s ‘body language’, which supposedly put fear into the minds of vandals of pipelines and public power stations. Others ascribed the improvement to the then high water levels and warned that it would be reversed once the rainny season ended.

Businesses have been on the receiving end as they spend heavily on fuel to power their electricity generators. So also are millions of Nigerian households which must endure the discomfort of darkness, heat, and food gone stale in refridgerators without power.

Small businesses such as tailor shops, hair dressers, welders, laundries, cold stores, restaurants, car washes, saw mills  and a host of others, are suffering additional cost of providing alternative power, or business lulls in this period.

The matter is made even worse by the on-going fuel shortages which have led to long slow queues in the few stations which are stocked, and pushed much of the products into the black market where prices shoot up geometrically.

Public transportation prices are also getting higher, as commuters groan day by day.

“The situation seems to have deteriorated,” said Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), in an exclusive interview with BusinessDay.

“The situation has been difficult for businesses, but the impact is more pronounced on SMEs. A lot of them have been spending a lot. For some of them who use petrol generators, the fuel scarcity has been making matters even  worse,”Yusuf said.

He attributed the situation to the challenge in the transmission chain, as well as system collapse, including gas pricing and gas supply.

Forty percent of manufacturers’ expenditure goes into power supply, according to the Manufacturers Association of Nigeria (MAN). For small businesses, energy spend occupies between 30 and 40 percent of expenditure.

As a result of the incessant power outages in industrial zones or clusters, which has increased significantly, the Manufacturers Association of Nigeria (MAN) has revived the independent power project (IPP) it abandoned a few years ago.

MAN had conceived an IPP project long before 2012 to improve power supply in industrial clusters and cut down production costs. But it abandoned the project when it was assured by the then National Electric Power Authority (NEPA) and later Power Holding Company of Nigeria (PHCN) that electricity supply would improve. But the current situation has prompted manufacturers to revisit the project.

“In fact, we are in the process of resuscitating it,” Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN) told BusinessDay.

“We are discussing with the Nigerian Electricity Regulatory Commission (NERC). We have a joint committee looking into the possibility of setting up power plants within industrial clusters and the committee will submit its report this week,” Jacobs added.

He said the situation was affecting manufacturers but stressed that they would give the present administration time to roll out its agenda.

Ike Ibeabuchi, a chemical maker in Enugu State, said the situation had raised his production costs and would likely lead to a hike in his prices.

“If this persists, prices will keep rising. This will have a big impact on inflation,’ Ibeabuchi said.

ODINAKA ANUDU