The collapse of southwest businesses and ivory on March 15, 2022, a broad view of a power distribution plant that has run out of power supplies due to a failure of the national grid, resulting in a total blackout in Lagos, Nigeria’s commercial city.
Small and Medium-scale Enterprises (SMEs), institutions of learning, and artisanal vocations in Southwestern states are rapidly collapsing following the latest national grid collapse, the fifth in two months and the third in about 30 days. They are collapsing under the weight of insufficient public power supply, estimated billing, and unaffordable alternatives, dumping millions of young people into an already overcrowded labor market.
Frustrated with the back-and-forth over an unacceptable billing method, a few colleges have decided to disconnect from the national grid, while many more are looking into other sources as costs have risen by hundreds of percent in a few years despite worsening supplies.
The zone’s condition has deteriorated as a result of the increase in fuel costs, which has been compounded by a lack of supplies from the grid. Some investors and company owners have already begun to scale back, with others ceasing operations due to the country’s high energy prices and tough working climate.
In particular, the Automotive Gas Oil (AGO), often known as diesel, has increased by around 200 percent in the previous six months as rising energy costs continue to hit many investors and Nigerian businesses.
At the first quarterly press conference on Nigeria’s economy for the first quarter (Q1) in Lagos last week, renowned economist and immediate past Director-General of Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, said the development is putting the economy in jeopardy, with many investors passing on cost increases to final consumers, as evidenced by the skyrocketing prices of food and commodities in Nigeria.
According to him, the abrupt increase in the cost of energy, primarily AGO, caused by both global and domestic pressures, has paralyzed Nigerian companies in all aspects.
The situation was compounded by the failure of the national grid, which resulted in a dramatic decline in grid electrical supplies and, as a result, load shedding. For both households and investors, the situation is growing untenable.
This has exacerbated the unemployment crisis while fostering more miscreants in the Southwest, which is home to many of the nation’s businesses, particularly in Lagos and Ogun states.
The lack of power and the resulting discontent among company owners is common in Ondo, Ekiti, Oyo, and Osun states, where young people are driven out of artisanal occupations and into okada riding and thuggery.
Factory and small-scale company owners in Ondo accused the Benin Electricity Distribution Company (BEDC) of hurting their operations with exorbitantly high anticipated costs.
According to a Guardian investigation, many of the state’s SMEs are barely surviving BEDC’s capricious billing scheme. According to The Guardian, several businesses were forced to close due to high utility bills and the added costs of running alternative energy sources. Those that are trying to make ends meet are not generating a respectable profit.
Potable water industries, laundry services, sawmills, fashion designers, vehicle car checks, welders, furniture houses, canteens, bars, hotels and spas, hairdressers, and cold room sellers are among those impacted.
For more than a decade, the state’s coastal territories, which comprise four local governments – Okitipupa, Ilaje, Irele, and Ese-Odo – have been cut off from the national grid. This has stifled economic activity in the area, putting the villages in jeopardy.
SMEs and craftspeople in the area rely on alternate energy sources, despite the high expense of running generators. Business owners in the region complain that the exorbitant cost of staying in business has forced several to close their doors.
Chief Paul Akinmosin, the state chairman of Potable Water Factories, stated that enterprises require power to thrive. He mentioned that they haven’t been getting along with BEDC.
According to him, many industrial owners use estimated billing plans since fewer than 5% of them are metered by the electrical utility.
“No pure water firm, on average, spends less than N100,000 per month on generators to power equipment.” “This is too high a price for us to bear,” he explained.
Mr. Gabriel Matthias, chairman of the Welders Organisation in Imafon Town, Akure North Local Government Area, Ondo State, stated that over 60 members of his association had gone out of business owing to power outages.
“Only a few households are metered, whereas more than 90% are on projected billing,” he claimed. And the majority of the welders here are approximated billing customers. Consider a modest store paying N50,000 in power bills each month.
Abdulganiyu Adewale, a former member of the Saw Mill Association in Ore, the capital of Odigbo Local Government Area, and now a commercial motorbike rider, described a similar story. He said that BEDC forced him out of business.
Adewale denounced alleged abuses of electricity distribution corporations, citing excessive fees imposed on customers as the biggest stumbling block in the state’s industrialization.
“As I speak to you, I am aware of over 30 saw-millers in this town that have gone out of business.” They are not just out of business, but also deeply in debt. Many artisans, whose profession necessitates the use of electricity, are now okada riders.
Another entrepreneur, Babatunde Alonge, a well-known garment designer in Akure, stated that the high cost of electricity was hurting his business. Alonge revealed that he had to secure a bank loan to set up his firm, and that he spent over N500,000 on a small industrial generating set to power his office.
He stated he used to be billed on an estimated basis, like other residences that are not on prepaid meters, but he refused it and urged BEDC to disconnect his business from the national grid.
Ivory towers in Ekiti State have bemoaned outrageous billing, erratic supply, and the prohibitive expense of alternative energy. The Federal University of Oye Ekiti (FUOYE), the Federal Polytechnic in Ado Ekiti, and the Ekiti State University in Ado Ekiti (EKSU) have voiced dissatisfaction with the epileptic power supply and the excessive rate imposed by BEDC.
The three academic schools have said that they are looking into alternative, more efficient, and less expensive energy sources to power their campuses. Separately, the institutions expressed their dissatisfaction with the outrageous monthly billings imposed by the electrical company.
Dr. Dayo Oladebeye, the rector of The Federal Polytechnic, Ado-Ekiti, said it has been difficult to pay the crippling monthly costs imposed on the university.
“We are already finding it incredibly difficult to pay the insane billings,” he added, adding that “the monthly cost now averages N8 million, up from N3 to N4 million in 2018.”
“We pay this much for an average of six to seven hours of daily electrical delivery.” The remaining hours are supplemented by diesel on heavy-duty generating plants. This, in and of itself, is a drain on the polytechnic’s earnings.”
Ojo Adebayo, Director, FUOYE Directorate of Maintenance, who testified on behalf of the administration, stated that the institution has not been receiving electricity from BEDC.
“We rely 90% on fuel to operate generators for eight to ten hours every working day.” The cost of gasoline is terrible, especially given the increasing and unpredictable price of diesel as a result of market deregulation.
“In light of this, FUOYE management is actively considering renewable energy infrastructure for power supply.” Recent investment suggestions are invited for review. Furthermore, the contract and funding models have been a key source of worry.
“Again, questions have been raised about the infrastructure’s sustainability, despite the fact that the science of solar systems is still in its infancy, particularly in terms of Research and Development (R&D) on battery life.” “All of this makes the first investment decisions essential,” he says.
Mr. Bode Olofinmuagun, EKSU’s spokesman, stated, “Electricity is our primary problem in this university.” As a result, we rely heavily on alternative energy for our learning and research operations. Unfortunately, the high cost of fuel has rendered alternative energy unprofitable. We spend a lot of money to pay our BEDC bills, and we spend much more to fuel our generators.”
Meanwhile, Afe Babalola University, Ado Ekiti (ABUAD) has decided to leave the BEDC network after completing 2.5 megawatts of its five-megawatt independent power plant. According to the institution’s spokeswoman, Tunde Olofintila, operating on power was not cheap since “we spend as much as N19 million to the public utility every month, in addition to running on 24 enormous generators in the university.”
In Oyo Level, businessmen and craftsmen whose companies rely on power have expressed dissatisfaction with the current state of supply. They voiced their dissatisfaction with the epileptic power supply, as well as their dissatisfaction with the excessive costs, which they claim have a severe impact on their enterprises and force many to close their doors on a regular basis.
Mr. Rimdam Namzing, Executive Secretary of the Manufacturers Association of Nigeria (MAN), Oyo, Osun, Ondo, and Ekiti zone, noted that the COVID-19 interruptions impacted companies and general living. According to him, the problem has been exacerbated by a faulty power supply.
He stated that last year saw an aggressive increase in energy rates as the government works toward the elimination of all subsidies, implying that the price of power will continue to rise. He stated that a survey would be necessary to provide facts and statistics on the cost of power.
He acknowledged that businesses fail for a variety of reasons, but emphasized the need of consistent and low-cost energy in keeping manufacturing operating.
Mr. Victor Aiyetoro, a spokesperson for the Oodua Group of Companies, stated that the company spends roughly N3 million each month on fuel to power its operations. This, he noted, is in addition to the expense of maintaining the power plants.
According to him, the vast sums spent on alternative energy might have been invested in other parts of the firm, creating additional employment and increasing capacity.
Oyedokun Opeyemi, chairman of the Printing Association, Mokola Zone, Ibadan, also lamented the cost of electricity and epileptic power supply, saying that none of the association’s members spend less than N30,000 to N40,000 on prepaid meter cards weekly due to the massive energy demand of the industrial machines they use.
“Electricity is one of the current difficulties we face, particularly in the printing business.” First, the amount of hours of supply we have each day is insufficient to maintain profitable operations. Second, even if there is a supply, we can only utilize it for other reasons rather than powering our printing equipment.
“For example, if you load printing paper and ink into the machine, it is usually wise and cost-effective to power the machine.” Otherwise, if the public power is turned off and the machine stops abruptly before you move over to the producing set, some harm to the job may have occurred,” he explained.
He also stated that some devices require continual power and that it is preferable to power them with a generating set rather than cleaning them at regular intervals, which is similarly inefficient. Many operators, he claims, have quit the printing industry because of the high cost of power.
HOWEVER, in response to the grid’s continual failure, the administration has proclaimed the newest failure to be an act of sabotage. Yesterday, Ahmad Zakari, Special Adviser to President Muhammadu Buhari on Infrastructure, bemoaned the situation and encouraged Nigerians to be cautious.
He claimed that the reason for last week’s power outage was “sabotage of the Ikot-Ekpene Calabar 330KV tower.” The devastation of the country’s infrastructure by residents, according to Zakari, is “impossible to grasp.” He emphasized the significance of increasing security around sites since the infrastructure is extensive and spans hundreds of kilometers, with several risk spots.
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