A Review of the Nigerian Energy Industry

Nigeria’s new electricity tariff draining industries’ profit

Franklin Alli

11 December 2012, Sweetcrude, Lagos – Industries across Nigeria have started feeling the negative impact of the new electricity tariff which they say have been eroding their profit margin as operating cost have risen by 440 percent since the new tariff was introduced in June this year by Nigeria Electricity Regulatory Commission, NERC.

A survey of 138 companies from the six geopolitical zones (Abuja, Bauchi, Calabar, Kaduna, Lagos and Owerri) conducted by NOI Polls Limited for the Nigerian Association of Small and Medium Enterprises, NASME, showed that the new tariff has been having negative effect on their businesses.

The survey covered companies operating in the Micro, Small and Medium Enterprises, MSMEs, within various sectors such as manufacturing, construction, computer sciences and technology, engineering services, hospitality, among others. Sectors surveyed showed that the new electricity tariff is hitting them hard as their operating cost have increased by 440 percent, since the inception of multi-year tariff II.

For instance, Alind Nigeria Limited is a private limited company based in Bauchi. The company employs between 10-49 employees and its annual turnover for the last financial year stood at N10 million. The company manufactures cables and semi-conductors. According to the Managing Director, before June 2012, the company was classified as 03 (industrial) for tariff classification and paid a fixed charge of N43, 471 and an average monthly electricity bill of N110, 000.

However, after the introduction of the new electricity tariff in June, 2012, their classification moved to D4, and they now pay a fixed charge of N106, 000 and an average electricity bill of N212, 231, representing 143 percent and 93 percent increases in the fixed charge and average electricity bill respectively.

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