New electricity tariff killing small businesses – NASME

Providence Obuh

29 November 2012, Sweetcrude, Abuja – Nigeria’s new electricity tariff, known as, Multi-Year-Tariff Order, MYTO, II is killing Small and Medium Enterprises, SMEs, in the manufacturing sector, according to the National Association of Small and Medium Enterprises, NASME.

The association said this was one of the findings of a survey it conducted to assess the impact of the new electricity tariff on micro, small and medium enterprises, MSMEs, in the country.

“SMEs in the manufacturing sector have been the hardest hit by the MYTO II tariff. They have experienced increases ranging from 70 per cent to 440 per cent in their monthly electricity tariff.

“On average, manufacturing SMEs across the country have experienced an increase of 188.6 per cent in electricity tariff since the introduction of MYTO II”, the association said.

The findings of the survey were presented by NASME’s Executive Secretary, , Mr Eke Ubiji, during a one-day Policy Dialogue with the Nigerian Electricity Regulatory Commission, NERC, on the effect of the MYTO II policy on MSMEs in Nigeria.

He said the survey was initiated by NAMSE following several complaints received from members about the high cost implication of the new tariff.

He said the survey, which was conducted by NOI, took place from November 6th to 12th 2012 in the six geo-political zones in the country with field work conducted in Cross-River, Bauchi, Imo, Kaduna, Lagos states and Abuja.

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 being 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.

Ubiji noted that the importance of MSMEs cannot be over emphasized, saying that findings from the survey shows that BMO members have a very negative perception about the MYTO II tariff and its introduction.

“Also 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.

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  • The new electricity tariff doers not equate the cost of running those small businesses on power generators. It is therefore a little far fetched to claim the new electricity tariff is killing small businesses.