Electricity failure is gradually killing small businesses in Nigeria’s Power State
By Jennifer UGWA
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SAVE for an elderly man and a little boy, no older than 10 years old sheltering from the smothering sun, the open-air trampoline roofed shack was almost empty.
Four months ago, Olayemi Oluwafemi, 35, a welder, would has been seen at the shack, cutting and soldering together iron rods for burglar-proof doors and gates, which were a popular order from his clientele.
The ear-splitting noise from his rickety 3.5kVA petrol-powered generator indicates that residents of Kwamba in Suleja, Niger State, were without electrical power supply, again.
Oluwafemi, a father of four, was running his welding business in Suleja at a loss. He was spending N1,000, One thousand nairas ($2.60) daily to purchase petrol to power his welding machine because electricity from the national grid comes up only for two hours daily.
He barely makes a weekly profit of N10,000 ($26.04). A hard pill for him to swallow, considering he pays N10,000 monthly for electricity consumed from the national grid.
During the COVID-19 pandemic, his flow of customers from Suleja slowed down to a trickle. This prompted him to tag along with some of his friends to look for welding job opportunities in Abuja, Nigeria’s capital city– 30 kilometres from home.
The interstate lockdown at the time led to a price hike in the transport fare, which made it financially difficult for him to commute from Suleja to Abuja weekly in his quest for new opportunities.
After shuttling between both cities, while working for some clients in Abuja he packed up shop in Suleja, permanently relocating his workshop to Abuja while his family stayed back in Niger State.
“If I was going to train my children with this work, staying in Abuja permanently was the sensible option. Besides in Kwamba here, I was spending over N1,000 daily on fuel, and that doesn’t stop the electricity company from charging me N10,000 for the estimated electricity bill every month,” he said.
Since he relocated to Abuja, the welder only sees his kids on the weekends when he visits home.
The city of dams, darkness, and dirty alternatives
The ride from Suleja to Abuja takes barely an hour and 30 minutes. Because of its proximity to the Federal Capital Territory, it is easy to erroneously assume Suleja enjoys constant power supply, just as the FCT.
However, the rural city is often plunged into days of darkness with no electrical power. On such days, small enterprises such as a beauty salon run by Ogbuanohs that rely solely on electricity to run their businesses are left to grope in the dark.
Ogbuanoh, 18, had a piece of paper on her hands with which she fanned herself and her sister Blessing Ogbuanoh, 38, at intervals.
The Ogbuanoh sisters run a beauty hair salon on Old Nepa Road, Suleja. For the next 10 hours, this section of the town will be in a blackout.
The electricity distribution companies (Discos) are rationing electricity supply and the shops on this lane will have to wait their turn.
The electricity power supply had been interrupted since 11 am that morning, barely two hours after it was restored and the stylists had no option but to generate their electricity for business.
And the two sisters are not the kind to let a walk-in customer leave without a hair wash and a dry. In a few minutes, the loud hum of their genset will contribute more noise to the already uproarious plaza.
To make up for the N15,000 ($39.06) monthly petrol expenses, customers are charged more for the extra service.
Over the two decades since Blessing Ogbuanoh, a mother of two has been a stylist, generating energy for her hair salon has never been as financially burdensome as the past few years.
Per annum, she spends around N180,000 ($468.75) on petrol alone. This sum is higher than her yearly rent.
“I pay N150,000 ($390.62) for my shop rent and N5,000 ($13.02) as an estimated electricity bill every month.
“Thankfully, my customers understand the situation so the complaint is minimal when I ask for the extra electricity charge when I use the power while I make their hair,” she said.
Put together, all three functioning dams in Niger State supply a combined 1,900 megawatts of power to the national grid.
‘They have tried’, referring to Discos, is now a normal comment. The tongue-in-cheek remark is never far from the lips of residents and businesses upon the interruption of electrical power on the rare occasions that more than three hours of power is supplied.
According to the Nigerian Bureau of Statistics, SMEs contribute to about 50 percent of the country’s Gross Domestic Product, GDP. A 2019 report by PricewaterhouseCoopers, PWC only 772,441 commercial ventures are consumers of electricity in Nigeria.
This is a small number compared to over 41.5 million SMEs operating in the country. It is assumed that the remaining 40 million businesses are either running their business using residential meters or entirely unmetered.
Only 3.39 million of 7.48 million households connected to distribution companies are metered according to PWC.
Hence, paying high estimated electricity bills has since become a financial burden that most Nigerians shoulder and this is no different for electricity-dependent businesses in Suleja.
No one listens to anyone
Just like his colleague Olufemi, who two months before he decided to relocate his business base to Abuja, Ade Ola, 46, works independently off the national grid.
Today he is seen assisted by an apprentice while he makes haste to keep to the allotted number of days his new secured welding contract allowed.
Ola was contracted to fix a series of aesthetically pine-shaped rods on the outer fence of Mac Hotel, a nondescript modern building on the outskirts of the city center.
He’s also going to be installing new poles for solar-powered street lights.
“We have already spent N1,500 ($3.91) on fuel today, and we are yet to meet the day’s target. The light is useless to me when it comes on, sometimes the voltage is too low for my welding equipment.
“A serious-minded government would help the people but this is Nigeria for you. No one listens to anyone.
“I am my own Disco. That is the only way to get this done,” Ola laughed.
He has been a welder for the past 27 years. After three days and no stable grid power, the duo is getting the work done with a Thermocool mini generating set running on what is supposed to be a walkway now covered in mud.
The World Health Organization linked outdoor air pollution associated with combustion, including generators, to an estimated 4.2millon premature deaths in both cities and rural areas in 2016 alone.
Despite the health and environmental risks of using Gensets, Nigerians spend $14 billion on generators and fuel annually, according to Ebrima Faal, African Development Bank (AfDB) in Nigeria.
The Nigerian energy sector was reformed in 2005. Since then, private companies can take part in the generation, transmission, and distribution of energy.
At the moment, 11 fully privatised distribution companies distribute power to the 36 states in the country.
Abuja Electricity Distribution Company, (AEDC) is responsible for distributing power to four of these states: Abuja, Kogi, Niger and Nasarawa, all in the north-central region.
“The energy supply in Suleja is a reflection of what the majority of Nigerians are experiencing due to low power generation,” said Emmanuel Onemu, Office Manager Abuja (AEDC) in an interview with this reporter.
He acknowledged that the sector is limited by multiple challenges.
According to Onemu, Nigerians are kept away from reliable power supply due to a mix of low power generation, transmission and distribution, corruption, fund diversion, mismanagement on rural electrification projects, inadequate transmission equipment and energy theft.
“The three key levels in the energy sector are handled by different bodies. That makes it harder to achieve certain goals, and that’s why there’ll be certain bottlenecks that could hinder effective operation.
“The resultant effect will be that power will not always be regular,” he said.
Meanwhile, the official, who said he was not entirely familiar with the technical intrigues of the sector, said the systematic rationing of energy in Suleja was due to low power generation from the generating company and a limited number of transmission equipment.
“For instance, if there are 5,000 buildings and the capacity of the installed transformer within the locality cannot transmit the required amount of electrical energy to all 5,000 houses at the same time, instead of leaving all 5,000 in darkness, we can decide to supply power to 2,500 building for a few hours and then the next 2,500 for another few hours.
“It is what we call load-shedding,” he said.
The Disco official claimed that government policies and interference put distribution companies at a loss.
However, contrary to the Disco official claims, Engr. Ishaq Mohammed Lapai, Director for Energy and Power, Ministry of Works, Niger State in a phone interview with this reporter said the unstable power supply in the state “is a surprise to the Ministry”.
Rather he claimed that a major factor affecting constant energy supply in the state was the Discos’ unwillingness to invest and upgrade distribution equipment.
“Enough power is generated and transmitted, but they cannot distribute it efficiently. The government felt that the reform in the sector would yield new developments, but the opposite is the case,” he said.
Lapai claimed that despite a series of dialogues between the Disco and the government to rectify the erratic electricity supply situation, no change is in view.
No leave, No transfer
Lapai is not the only one who feels that the privatisation of the sector limited energy distribution in Suleja.
“The Disco’s can decide to seize the power all day and restore it in the middle of the night by 11 pm to 1 am. And at that time, I won’t risk stepping out of my house even if I am being paid a million Naira. Automatically, no light means no work ” said Benjamin Omojesu, 57, electrical technician and a father of nine.
Popularly known as “Baba No Problem” due to his interjections of ‘no problem’ in conversations, Omojesu has been an electrician for over 30 years.
In narrating the challenging ordeals brought on by lack of power in the city and the effects on his job, the electrician said the privatisation of the Nigerian Power Holding Company was a crippling move.
“There is more increase in payments and a decrease in consumption. It was when we had the National Electric Power Authority that Niger state had a better power supply.
“Now despite having functioning dams, we do not have a steady power supply,” the technical director of God’s Will Electrical Work complained.
The grandfather from Ondo who has made a life for himself in Suleja is not considering a permanent relocation to Nigeria’s federal capital but hopes to get contracts from Abuja.
He is not opposed to commuting from Suleja to Abuja for a few days’ job.
Taking a clean break
The recent increase in the prices of petroleum products in the post-COVID-19 era, made worse by the estimated billing systems of electricity-dependent businesses in Suleja, is pushing entrepreneurs to opt-out of the unfavourable status quo.
But some businesses, such as Barbers Gallery, are taking a more sustainable and healthy path.
Tucked in a corner of the busy street leading to the Ibrahim Babangida International Market, the barber-shop is the only one of its kind that runs solely on solar energy in the area.
After trashing another generator two weeks ago due to technical issues; making it the fourth one in three years, Badamasi Aleey Zachery, 36, father of three and professional barber, knew that if he was going to keep running a customer satisfying establishment, it was time for an electric power upgrade.
And this time, he was going clean.
After days of deliberation with renewable energy consultants, Zachery had a solar hybrid inverter installed one week later. His new upgrade cost N600,000 ($1562.50).
“Despite payments of outrageous estimated electricity charges, there was nothing to show for it.”
“I did the math and realised that I was making massive losses. I have three boys that need food on their plates and I have bills to pay. A huge portion of my earnings was spent on fuel and fixing the generator.
“Disconnecting from the national grid is one of the best business decisions I made this year. Now I can breathe easy,” he said.
The barber told this reporter that, before, he spent a weekly total of N8,500 ($22.14), on fuel alone. In a year, Zachery would have spent N442,000 ($1137.81) on fuel alone. A sum that would pay his annual rent four times!
Nonetheless, with three apprentices and a recent boost in clientele that he attributed to his recent energy upgrade, Zachery is optimistic to make more than 50 percent of the amount it cost him to install the energy system by December.
Government policies and the renewable energy sector
In March when a bill to ban the importation of generators into Nigeria passed the first reading in the Senate, climate and health activists hailed the push by the lawmakers for laws on cleaner sources of energy.
However, until May 2020, a five per cent Value Added Tax and a heavy customs duty was still placed on the importation of solar panels into the country.
So, when the VAT waiver for a few renewable energy equipments was announced, it came as a relief for investors in the sector.
But even though the news may seem good, the list of exempted equipment excluded deep cycle solar batteries.
Experts say this undermines Nigerian’s commitment to the 2015 Paris Climate Change Agreement, intrinsically connected to SDG goal 7; of achieving affordable and clean energy by 2030.
Engineer Paul James, Director Polar Advance Energy Solution Limited and former consultant on power to Nigeria on Millenium Goals, now Sustainable Development Goals bemoaned high taxes and customs duties on renewable energy equipment.
In an interview with this reporter, James said heavy importation charges will keep huge investments in the Nigerian renewable energy sector from serving its energy-starved populace.
“Whatever VAT they (government) claimed to have removed is a joke. There is no significant change. Instead, we are seeing an increase rather than a decline.
“Besides, the port officials find other means of billing investors.
“They are ready to take you for all you have if they have their way,” James said.
Also, he said the lacklustre attitude of the government in creating and implementing policies is a big setback within the renewable energy sector.
“The high cost of renewable energy equipment is due to the absence of a cost control regulatory agency. So everyone sells as they buy. I think we still have a long way to go,” he said.
This weekend, Oluwafemi is spending an hour away from his children again. But this time, he is within the neighborhood.
The welder had been called on by an old client upon his arrival from Abuja the previous day to fix a door lock for one of his old clients in Suleja.
He still has dreams of moving his business back home someday.
“My life is here, but this is just the way it has to be for now,” Oluwafemi said.
With only 12,000 MW of installed capacity out of which just 3,000 MW to 4,000 MW gets to end-users in a country of almost 200 million people, Suleja is not the only Nigerian city experiencing energy challenges as it is estimated that over 90 million Nigerians are not connected to the grid.
This story was supported under the African Energy reporting fellowship by Climate Tracker.