For eight months now, a plastic bottle and cellophane bag manufacturing plant in Mowe, Ogun State, has closed due to unbearable conditions. high operating cost.
The medium-sized factory claimed the situation was temporary and promised to recall staff members within three months. Since then, some time has passed with no signs of reopening, while staff members, who are out of work, and their families are greatly affected.
In Lagos, some bread makers no longer have their breads on sellers’ shelves because the bakeries have closed, also due to the unbearable high cost of operation.
It’s also the same sad situation across the country, as many small businesses, which have been dealing with persistent macroeconomic headwinds, are closing their doors.
While the challenges are numerous, the worst of all, according to many small business owners, is the high cost of obtaining alternative electricity, as the regular supply He has always been epileptic.
According to Damian Nsikak, a small business owner, there are many problems for small businesses in Nigeria as the price of diesel outweighs rising costs.
Nsikak, who runs a bottled and sachet water factory in Egbeda, Lagos, alleged that he has been dealing with huge overhead costs for the past year, amid new taxes every month, harassment of his staff by local council agents and confiscation of their supply. trucks by the Federal Road Safety Corps, Vehicle Inspection Officers (VIO), among others.
“We can always get around some of these challenges, but not the supply of electricity for epileptics. There are no shortcuts, any alternative source of electricity is expensive because we need big generators to run our machines, big generators consume diesel like water and you know how expensive diesel is now,” he lamented.
But what worries the businessman the most is the enormous amount he pays every month as an electricity bill, but at the end of the day the supply is little or none.
“Before opening the factory on February 20, 2019, the Ikeja Electricity Distribution Company recommended that I purchase a small transformer, which I did, and was told that it was connected to the Band A tariff plan, but that I often use a generator. . So where is the 20 to 24 hour light they promised?
“If you are wondering why the price of sachet water is out of reach for the masses, the reason is high operating costs, especially running diesel generators. The price will rise soon,” Nsikak warned.
Cyprian Obilor, another businessman who runs a 25-room hotel, a restaurant with an open-air garden and a laundry on the same premises in Wuse, Abuja, alleged that the lack of stable electricity supply causes high running time of generators. in the horrendous conditions. Price of diesel and spare parts.
“No matter how small a hotel is, the cost of operation is greatly affected not only by the rising cost of diesel, but also by the extra hours of operation. I think the least any small hotel will consume per day on diesel is 1,500 liters at 1,300 naira per litre, if you use a medium sized diesel generator. This is equivalent to N1,950,000, almost N2 million per day if they run diesel generators all day long, which is often the case.
“If you multiply that amount in a month, you will get about N60 million, so how much profit will we make? However, the FCT task force will harass us if we do not pay any tax or levy on time,” he said. he pointed out more.
While crying for small businesses, Obilor, a member of the Hotel Owners Forum Abuja (HOFA), mourned more for big and branded hotels, which he noted would need about 5,000 liters of diesel at N1,610 per liter per day, depending on size. of its operation and which amounts to 6.5 million naira every day on diesel alone.
Apart from the high cost of diesel, most small business owners regret that maintaining generators at the current cost of spare parts is another issue, which also depletes their profit margin.
Adding to the plight of small businesses is the new electricity tariff, which the organized private sector is asking the government to suspend, as businesses can pay up to N1.4 billion annually under the new tariff.
“As things stand now, many manufacturing companies, especially SMEs, are going to close because the 200 percent increase in electricity tariff at this difficult time is detrimental to the survival of our business and would lead to an unprecedented slowdown in the productive sector of the economy. “, denounced Abel Ugbede, member of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), a branch of the Organized Private Sector of Nigeria (OPSN).
Ugbede predicts that manufacturers, whether small or large, will pay more for electricity that has never been available and, as usual, will pay more to boost alternative energy sources, in addition to incurring huge costs that would be passed on to customers. , which are already weighed. due to low purchasing power.
Speaking about the grouping of customers into different bands by power companies, Ademola Fakeye, a paint manufacturer, noted that segregation is meaningless because whatever the band, there has never been a stable power supply.
“Both Ikeja and Eko power companies promised Band A customers 20 to 24 hours of electricity supply per day, Band B customers 16 to 20 hours and Band C customers 12 to 16 hours a day. Daily hours. But none of these bands enjoy up to 10 hours of constant power supply. I think it is fraud and the companies should be charged in court for not holding up their end of the deal or returning the huge money that customers have been paying,” he said.
Fakeye reported that his factory in Ijegun is not connected to Band A, but he has no regrets because those who are connected do not receive electricity supply as promised, hence he questioned the essence of the ‘premium’ band when the service is not premium.
“If I am a Band A customer and I don’t get the promised power supply of 20 hours a day, I will order lower bands where I will get less supply and pay less for it. However, the government should suspend the new tariff until nightclubs improve their power supply.
“We don’t want to hear that the gas turbine failed, the grid collapsed or any other problem that affects the energy supply because we have paid for that duration of the energy supply and we must receive it or get the money refunded,” he concluded.
Furthermore, pressure has continued to increase on companies with an apparent rising season.
Apart from the electricity tariff, the Central Bank of Nigeria had earlier increased the interest rate from 22.75 percent to 24.75 percent, a move that the private sector said would result in higher inflation, massive job cuts and low productivity, which will negatively impact the Gross Domestic Product. Product (GDP).
Defending the increase, Yemi Cardoso, CBN governor, insisted that its objective is to combat inflation, stabilize the economy and restore the purchasing power of the average person.
But Emeka Onochie, an auto parts and components manufacturer based in Nnewi, Anambra State, noted that with the increase bank credit is no longer affordable as businesses would be under pressure to repay loans when the tough economy does not guarantees sustainable sponsorship.
“Looking ahead, the signs are clear. Those who cannot borrow to finance their businesses should remain small or close their businesses because patronage is not guaranteed as before. Many Nigerians are just surviving,” said Onochie, a mechanical engineer and member of the Nigerian Association of Small Scale Industrialists, Southeast Zone.
Unfortunately, the worsening situation has seen Nigeria fall from being the largest economy in Africa to the fourth position, with South Africa now the largest economy, followed by Egypt and Algeria, according to the recent ranking of the International Monetary Fund (IMF).