When Tolulope Akanni, 36+concluded his apprenticeship as a shoe cobbler in 2004, he looked forward to a successful career in the line of his trade. Armed with a small capital which he raised from family and friends, he set up shop at Iyana-Ipaja axis of Lagos, an uptown district, where he carved a niche for himself with his signature style shoes comparable only to brand names like Hugo Boss, Alberto De Mario, Gucci, who hug headlines of fashion magazines worldwide.
Naturally, as his clientele grew, Akanni began to nurse the idea of the export market, especially within neighbouring countries like Togo, Ghana, among others.
Of course, to make this dream a reality he took some loan and used a landed property which was his inheritance as collateral to secure the facility.
With the money, he hired a few hands, rented a bigger space which he equipped with state of the art workstations.
However, a midnight fire ignited by a spark in the generating plant razed down the factory to smokescreens.
Of course, he had to indemnify the landlord of the house he rented for office space. To make matters worse, he had to give up the landed property he used as collateral to secure the facility at the bank because he couldn’t pay up.
That is how the dream of a promising young man was cut short.
Recalling how his business empire died its natural death, one of Akanni’s siblings, Olawale attributed the mishap to epileptic power supply.
“If power was stable, there won’t have been any reason for Tolu to get a generator in the place. As we speak, Tolu is now eking a living on the streets of Lagos as a commercial motorcyclist popularly known as Okada.”
There many Tolus out there who have had their dreams literally killed as a result of incessant power cuts.
Erratic power supply renders economy prostrate
To say epileptic power supply has rendered the economy literally prostrate is simply stating the obvious.
Among those affected are manufacturers who have had to incur over 70 per cent rise in cost of operations as a result of poor power supply.
According to a report from the Manufacturers Association, of Nigeria (MAN), members companies in the past three years, spent N20.8 billion, monthly on power generation to run production process.
MAN President, Frank Jacobs, said the ripple effects of the power shortages and constant outages were numerous, ranging from cut down in production, job loss to outright closure or relocation to other countries by industries.
He added that companies had to bear so much loss as the outage often occurs when goods are in the middle of production.
He said: “when you are producing and power is taken unannounced, goods in line of production would be destroyed.”
As a result of this, Jacobs said many members of MAN have resorted to generating power privately and completely cut off their operations from the national grid.
“Most companies, like Coca cola, Wempco, Nigeria Flour Mills and especially the multi nationals self-generate their power. They don’t rely on the national grid. And for the last three years, our study showed that our members spent averagely in a month, N20.8 billion,” he said.
Echoing similar sentiments, the Director General of the Nigeria Employers Consultative Association (NECA), Mr. Segun Oshinowo, said generating alternative power to run the manufacturing sector is expensive and invariably increases the cost of production.
Oshinowo said as Nigerian companies operate in the global market, the consequence of incurring high cost on power generation undoubtedly would make the nation’s industries less competitive.
Corroborating Oshinowo, the Director General, Lagos Chamber of Commerce and Industry (LCCI), Mr Muda Yusuf, said members of the Chambers, be it multinationals or Medium, Small or Micro Entrepreneurs (MSMEs) have all resorted to alternative source of energy, ranging from gas, diesel or PMS, which he said is affecting their cost of operation and overall effectiveness.
“Some of the big companies have completely cut off from national grid to private gas supply as means of providing power for their operations. This is because some of their operations and productions cannot work with the epileptic power we are experiencing in the country. All the multinationals are generating their power themselves right now.”
Yusuf said though some of the companies still manage to operate on public electricity, but noted that they have to revert to diesel to power their generators anytime there is an outage, which he said is more expensive.
“Those that suffer most now are the SMEs and the micro operators that rely on generators, more so now that the fuel is not even available, their problems have been compounded,” he said.
The National President of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Chief Bassey Edem, said that despite the privatisation of the power sector, there is still epileptic power supply in the country.
He lamented that the country generates less than 5,000 megawatts (MW) of electricity for its over 170 million population.
This, Edem said, does not go anywhere in meeting the requirement of the Nigerian people. He stated that many Nigerians that are out of job today would have been employed, directly or indirectly, if there is reasonable power supply, adding that manufacturing industries would operate well, expand their capacities and employ more people.
Ripple effects of poor power supply
With a remarkable increase in operational cost and poor purchasing power of consumers, the manufacturing companies have had to lay off thousands in the last six months, with about three million still to go.
A 2015 report of the Good Governance Initiative (GGI), a non-governmental organisation advocating uninterrupted power supply in the country, says Nigerians spend N3.5 trillion on fuelling their generators annually.
Its President, Mr. Festus Mbisiogu, said an intensive research conducted by the body to ascertain the negative multiplier effects of unsteady power supply last year showed that the manufacturing sector spends over N800billion yearly on generators.
He added that this is apart from about N2 trillion spent on running generators by over 17 million Small and Medium Scale Enterprises (SMEs), banks, other corporate entities and traders across the country.
He explained: “In the banking sector, each branch spends over N4million on diesel in a month. When you multiply that figure by the number of bank branches in Nigeria, it could be collosal. An average family man spends between 60,000 and N100, 000 in a month on fuel, apart from the maintenance.
“With over 6,133 bank branches and each expending N4million on diesel a month, N48million will go down the drain in a year, and this will amount to N294.4billion per annum across all the branches. This means that not less than N1.5 trillion must have gone into diesel purchase in the past five years. This is outside the amount spent on powering ATM points located outside banking premises and maintaining the generators, among other critical banking infrastructure,” he stated.
Financial experts say the amount spent on fuel and generators by manufacturers and SMEs will increase remarkably this year as 2016 is clearly the harshest since the 2008 global economic meltdown.
Recently, the organised labour raised an alarm that the food, beverage and tobacco sector of the nation was on the verge of shutting down and that over three million jobs were at risk due to the inability of companies to meet the crippling cost of production.
Already, leading companies in the sector such as Nigerian Flour Mills, Nigerian Breweries, Guinness, Nigerian Bottling Company, 7-UP Bottling Company, Friesland Campina Wamco, among others, have written to labour for discussions on planned sack of workers.
Telcos worst off
The telecoms firms are in a fix considering the fact that many cannot cope with the rising cost of generating their own power supply.
Currently, there are some 25,000 base stations spread across the country all powered by generating sets. They serve over 150 million subscribers.
These structures, according to industry experts, are grossly inadequate for the huge subscriber base that our network operators carry. That may then partly explain why Nigerian subscribers and consumers of telecommunication services are not getting value for their money.
Analysts are of the view that quality of service can be improved with provision of electricity to reduce cost of operation.
Besides, the analyst reckoned that if government provides adequate electricity, diesel spends can be diverted to infrastructures.
Citing a report of the company’s financials in the year end, Mrs. Amina Oyagbola, Corporate Services Executive, MTN, said, MTN Nigeria presently has 12,000 base stations across Nigeria. The company, she noted, could have built more and further increase the quality of service but for higher operational cost particularly diesel. For instance, in 2014, MTN Nigeria spent N30.5bn on the purchase of diesel.
This amount, experts said, could be used to build another 5, 000 base stations which could have help improve the quality of service in Nigeria and probably contribute to lower call rates.
According to Oyagbola some of MTN’s investment in infrastructure to boost quality of service dates back to January 2003, when it commissioned the first phase of its digital microwave transmission backbone called the Y’ello Bahn. Constructed at an initial cost of $120 million, the first phase of Y’ello Bahn spanned 3,500 km. The second phase which started in July 2003 extended the project to cover a total of 4,500 km.
The length of the entire digital microwave transmission backbone currently stands at 11, 400km. This interconnects with Cameroun in Borno and Cross Rivers States and with Niger Republic in Sokoto State.
In terms of distance and capacity, this makes the Y’ello Bahn Africa’s most extensive digital transmission infrastructure which has significantly contributed to enhancing call quality on the networks. This also included the deployment of fibre optic cables across the country to boost the transmission capacity on the network.
Corroborating Oyagbola, a telecoms expert, Soremekun Adio, observed that most of the telecoms networks rely on power to run their base stations and this can only be done reliably using private power plant because the public power source is grossly inadequate if available at all.
Aviation sector not exempted
In the aviation sector, many businesses are going through very hard times. It is estimated that the industry is incurring an additional cost of about N100 million, having to power its facilities on generators.
The National Bureau of Statistics put the total number of SMEs in the country at over 17 million, many of which rely on generators to run their businesses as the country continues to grapple with abysmal power generation.
Speaking with The Nation at the weekend, a lab scientist who simply gave his name as Gabriel said by the nature of his work, he hardly relies on public power source.
“I expend a lot of running cost for diesel on a weekly basis. What I spend is between N10-N12, 000 on diesel and sometimes it could be higher depending on the traffic we have in the lab in a week.”
While giving assessment of the present administration, he was, however, quick to admit that President Muhammadu Buhari was barely trying to right the wrongs he met on ground.
Gabriel probably spoke the mind of Minister of Power, Raji Fashola, who has always argued that the protracted crisis in the nation’s power sector was burdensome hence requires critical restructuring.
Though small businesses like Gabriel’s are probably not captured in the statistics reeled out by bodies like NBS and GGI, they suffer a lot of anguish still.
