Don't Miss


Home   >   Business   >   Industries   >   Energy   >   New Electricity Tariffs Stifling Growth of Small Businesses

New Electricity Tariffs Stifling Growth of Small Businesses

By on November 29, 2012

Despite the claims several weeks ago by the National Electricity Regulatory Commission boss Dr Sam Amadi  that the current electricity tariff in Nigeria is the best compared to other Nations in the globe, Small Businesses  in the country do not agree with that assertion.

The National Association of Small Medium enterprises (NASME)  in a recent survey it conducted  on the impact of the new electricity tariff  on micro, small and medium enterprises  MSMEs in the country, revealed that the “SMEs in the manufacturing sector have been the hardest hit by the tariff regime”.

Multi Year Tariff Order(MYTO II) which is the name for the new tariff , has brought increases in electricity rates from 70 percent to 440 percent in their monthly tariff. Which means  the average manufacturing SMEs have experienced  188.6 percent  increment on electricity tariff since the introduction of the MYTO II.

It will be recalled that various research studies  and surveys carried out on the factors impeding the growth of the Small Medium Enterprises, identified that epileptic power supply in the country as a key factor hampering its growth. With a slight improvement   in the power sector an astronomical increment in the electricity tariff is obviously not what the SMEs bargained  for.

The findings of the Association was presented by the Executive Secretary Mr  Eke Ubiji at the one-day policy dialogue with the Nigerian Electricity Regulatory Commission  on the effect of the MYTO II tariff on the MSMEs (Micro, Small and Medium Enterprises).

A total of 138 businesses were interviewed and 127 interviews were completed, 45 per cent of the completed interviews were NASME members, while 55 per cent were non- NASME members but SMEs as well as members of other business membership organisations (BMOs) such as Nigerian Association of Small Scale Industrialists (NASSI), Manufacturers Association of Nigeria (MAN) and State Chambers of Commerce and Industries.

Mr Ubiji said “More businesses have increased their average spend on electricity from between 10 per cent to 20 per cent of total operating costs before June 2012 and from 20 per cent to 30 per cent of total operating costs after June 2012. There has also been an increase from 11 per cent to 18 per cent on the average spend on electricity as a percentage of their operating cost since June 2012”.

The National Electricity Regulatory Commission now has the task to review the presentation of the MSMEs with the commitment of ensuring that the MYTO II does not kill the potentials of small businesses in the country.