By Merit Ibe, Noah Ebije, Aloysius Attah and Timothy Olanrewaju
Nigeria’s energy crisis has taken a worsening dimension as manufacturers as well as small-scale enterprises groan under the yoke of high energy costs amid worsening electricity supply.
Stakeholders in the country’s weak industrial sector are at the receiving end of high electricity bills and incessant power outages and constant collapse of the national grid in recent times, leading to unbearable costs of doing business with huge costs to the economy.
Parts of the north have been in darkness for weeks while many businesses in the south are on the verge of either shutting down or laying-off their workers.
We may lay-off workers – Ibadan industrialist
An industrialist in Ibadan, Oyo State capital, Mr Abayomi Obabolujo, CEO, 200 Stars Industries Limited, narrated his frustrations in an interview with Saturday Sun. He noted that with the high electricity costs and constant power outages his factory experiences daily, he might soon be forced to shut down the facility and lay off the workers before he runs into bankruptcy.
Hear him: “At the factory, we manufacture PVC pipes. They were bringing between N7 million naira and N7.5 million as our monthly bill, and we were managing to pay. Then suddenly, they increased the electricity bills, and we started paying N25 million every month. That was too much for me. So, in order not to close shop, we had to de-emphasise the use of diesel and focus on electricity. Because there is no way I would be paying that much monthly and still be paying for diesel. The factory will shut down.
“And the machines that I use, we use heat to operate. Which means once there is power, the machines will run for between two and half to three hours to generate enough heat before they would be ready to start operations. That would be when the machine would have generated enough heat to produce.
“Now, what these people would do is to supply power for just three hours. As soon as we’re set to start operations, there will be a blackout. And by the time they will restore it, the machines would have gone totally cold. So we can’t produce, yet electricity bills will keep accumulating. And I don’t get commensurate production to make the money to pay the bills.
“We have complained to the Ibadan Electricity Distribution Company (IBEDC), but there is no improvement. The situation has gone far worse in this rainy season. They might take the light for 20 hours before restoring it. And the workers would be waiting, hoping that they would bring the light. So you have workers that would spend the whole day and the whole night at work, doing nothing. And at the end of the month, would I ask them to go home without getting paid? So every month, I have to pay for jobs that are not done.
“I’m already thinking of probably closing the factory and then asking everybody to go home.”
Companies are shutting down – Onitsha Chamber of Commerce
In Onitsha, the commercial hub of Anambra State, manufacturers and industries are grappling with twin issues of high cost of electricity and constant outages.
Chinedu Nwonu, 1st Deputy Vice Chairman, Onitsha Chamber of Commerce, Industry, Mines and Agriculture (ONICCIMA) in a chat with Saturday Sun said the high cost of electricity has resulted in the shutting down of some production companies at the Bridgehead industrial area of the city as they could no longer operate.
He said production capacity has drastically reduced, thereby leading to staff reduction while high cost of power also led to reduction in the procurement of raw material inputs and poor capacity utilization.
He said one of the effects is that the cost of living has increased as producers have increased prices of their goods and services in order to cope with the cost of energy.
“Due to the high cost of electricity, most businesses can no longer employ, thereby worsening the unemployment rate in the South-East. Businesses are not in control of the variables that facilitate power availability or cost reduction of power. The only solution is for them to seek alternative sources of power.”
He said the government could equally subsidize energy costs by privatizing and democratizing power provision and get investors to fund such installations with government backing.
Nwonu said many manipulations occur at the end of billing depending on the size of the business.
Director General, Manufacturers Association of Nigeria (MAN) Anambra/Enugu/ Ebonyi, Mr. Sunday Sotomi said that factories now pay an average of three million naira monthly while medium scale businesses pay up to N300, 000 and more for their energy bills.
He said the situation would lead to the collapse of many companies and industries nationwide if left unaddressed, adding that the government should help industrialists by supporting them to procure alternative sources of power
Check for this story on Part 2-4
Manufacturers’ groan over high electricity bills (2)