The Nigerian government has announced plans to introduce cost-reflective electricity tariffs, signaling the end of longstanding subsidies. Minister of Power, Adebayo Adelabu, emphasized the unsustainable nature of current subsidies, citing over ₦4 trillion in debts owed to power generation companies. He stated that while targeted subsidies would continue for economically disadvantaged Nigerians, the broader population must prepare to pay the actual cost of electricity consumed.
This development has raised concerns among business owners, particularly within the Organised Private Sector (OPS), which includes the Manufacturers Association of Nigeria (MAN) and the Nigerian Association of Small and Medium Enterprises (NASME). The OPS warns that the proposed tariff increase to ₦225 per kilowatt-hour could force over 65% of businesses, especially small and medium enterprises (SMEs), to shut down due to escalating operational costs.
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The OPS highlights that Nigeria’s electricity costs are now among the highest globally, ranking third after Germany and the United Kingdom. Despite these high costs, the power supply remains inadequate, further straining businesses that rely on consistent electricity for operations.
Entrepreneurs are advised to proactively assess their energy consumption and explore alternative solutions to mitigate the impact of the impending tariff hike. Options include investing in energy-efficient equipment, exploring renewable energy sources, and optimizing operational hours to reduce electricity usage during peak tariff periods.
The government’s move towards cost-reflective tariffs aims to attract investment in the power sector and improve electricity supply. However, without adequate support measures, SMEs may struggle to absorb the increased costs, potentially leading to business closures and job losses.
As the situation evolves, stakeholders urge the government to engage in transparent dialogues with the private sector to develop a balanced approach that ensures the sustainability of both the energy sector and the business community.
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