A Review of the Nigerian Energy Industry

‘New electricity tariffs stifling small businesses in Kano’

electric-meters27 August 2013, Kano — For years, commercial activities at the Dakata industrial layout in Nasarawa Local Government Area of Kano State were booming courtesy of the numerous small scale industries that dotted the area.

The area housed many small scale factories producing products like groundnut oil, yoghurts, polythene bags, mats, sachet water, aluminum doors and ice blocks in commercial quantities. From across the country and even neighbouring countries like Niger Republic traders thronged to the area for their business transactions.

The commercial activities then made it a haven for unemployed youth in the state. Hundreds of youth from across Kano metropolis seeking for daily jobs got solace there. Over 300 small scale businesses are situated in the area, providing employment to about 200,000 persons.

However, a visit to the area which was popularly known as Dakata small scale industrial area showed that its glorious days have since disappeared. The place is now a shadow of its former self as more than half of the factories that illuminated the area have closed shop and the usual hustle and bustle that once made it the source of employment for many is no more.

The place is now a graveyard of dead industries, due to the sudden increase in the fixed charges of the Power Holding Company of Nigeria, PHCN.

A cross section of the operators of the industries blamed their misfortune to the over “1000 percent” increment in fixed charges of the PHCN introduced few years ago.

Speaking with our correspondent in Dakata, chairman of Kano State Polythene Bags Manufacturers Association, Alhaji Dalhatu Sanusi, said the sudden increase in charges has sent over 200 small scale entrepreneurs out of business in the industrial layout.

“From June 2012 when the fixed charge of N536 we were paying was jerked up by the PHCN to N104, 600, over 200 of our colleagues have closed their factories, sending 169,000 workers out of employment,” he said.

He said PHCN officials wrongly placed them on D2 in order to meet their monthly revenue target. He called for the immediate review of fixed charge to save the remaining industries in the area from folding up.

“They wrongly placed us on D2 because they want to meet their revenue target. In Kaduna and Abuja small scale industries are placed under D1 but we here in Kano are placed in D2. This is wrong because our consumption is below 45KVA and as such we should be in D1.

For years we were on D1 and zonal metering engineers of the PHCN after their study of our consumption confirmed that we should be in D1 and not D2,” Alhaji Sanusi said.

He said the PHCN increased the rate despite the irregular power supply in the state.

“The target of the PHCN is to jerk up the fixed charge to N248, 184 by 2015 and if they are allowed to do that, believe me you all the small scale industries in Kano will close down. And we all know that the backbone of any country’s economy are small scale industries. Before the increment in fixed charges, we were battling with high cost of raw materials which made us unable to compete well with our foreign counterparts. Now the PHCN is suffocating us,” he said.

With the fixed charge, he said, they pay about N500, 000 each monthly to the PHCN. “Now in Dakata, we are owing PHCN about N1 million each and we are about 60 industrialists still existing there. Before we hardly owe, we always settled our bills because we are all serious business minded entrepreneurs,” he added.

Yazid Musa, 30, one of the entrepreneurs in the area, established his Fortress plastic company about five years ago and has about 50 persons working under him.

“Before the increment I was paying N20, 000 monthly but this month my PHCN bill is N455,000. How can I pay this? I run three shifts here in my factory but now I hardly run one but I thank God that my business still exists.

“The PHCN went and placed us in the same category with Dangote while we are not on the same production level. Initially when others were closing their businesses I thought it was a joke but now the virus is knocking on my own door,” he said.

The lamentation of Yazid reechoes that of many other entrepreneurs interviewed by our correspondent. It was observed that many industrialists in the area have not only closed shop but they have sold their equipment, blaming their predicament on PHCN fixed charge.

When our correspondent went to the PHCN headquarters in Kano, the spokesperson of the company was said to be on leave. However in his response to the complaints of the owners of the industries, the Chief Executive Officer of Kano Electricity Distribution Company, Mr. M. T. Balogun, said the fixed charge was approved by the Nigerian Electricity Regulatory Commission, NERC.

“Your attention is hereby drawn to the fact that a fixed charge for customer was approved by NERC and not management of Kano Electricity Distribution Company. We do not have the authority to allow any customer pay anything less than this fixed charge,” he said in letter addressed to the leadership of the association of small scale industries.

According to him, following the complaints of the industrialists, they have made a representation to NERC for a downward review of the fixed charge and that they are still awaiting response from the commission.

– Daily Trust

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