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SME: How electricity DISCO’s ‘Crazy Bills’ stifle SME operations in Nigeria

All is not well with small scale entrepreneurs in Nigeria, following a number of recorded setbacks they are currently experiencing due to series of outrageous electricity consumption bills currently imposed on their business locations in a seemingly unrealistic manner by the new owners of Power Holding Company of Nigeria (PHCN).

Recent findings have revealed that the ‘crazy bills’ is already posing a threat to the existence, operations and productivity of the operators in the country. As a result, a number of SMEs have been languishing under the grave effect of this trend, thereby compelling them to either opt for a change in venture or outright closure of business.

During findings, a similar case was followed up on a polythene manufacturing company situated in Okota Lagos. The company was discovered to have incurred unreasonably and steadily increasing outrageous bills within a span of three months (June, July and August) in 2016.

It was observed with evidence from the electricity bills offered the SME operator by the Oshodi Business Unit of the Ikeja Electricity Distribution Company (IKEDC) that the costs of electricity power supply incurred by the affected company for the three months were N68, 694.09; N285, 097.14; and N1, 011, 333.92 respectively.

The SME operator lamented that while he hesitated at responding to the bill, a team of the IKEDC operators stormed his business premises a couple of days later to serve him a disconnection notice and immediately went on to disconnect his building from the source of power.

In a similar case, a food and beverage manufacturing SME Company operator situated along Oko-oba road between Agege and Abule-egba in Lagos state, lamented that until his resolve to voluntarily disconnect his company from the IKEDC source of electricity power supply, he was compelled to pay a minimum of about N500, 000 on monthly basis as electricity bill.

According to him, having discovered the monthly outrageous bills, which at a point, he could no longer afford, he opted for a single-owned transformer to be installed in the premises of his company. But while this lasted for a short while, he discovered that the situation was best described as ‘moving from frying pan to fire’. He said the bills that were brought to him during this time didn’t make any difference from the previous ones. So, as a result, he decided that the transformer be uninstalled and taken away. He said, since then, his company has depended on power generating plant, which costs the company a burdensome amount in fueling with diesel and maintenance of the power generating plant.

The situation has been described by the SME operators as unethical, too burdensome and cumbersome a bill to be incurred by such category of operators in the country. Some entrepreneurs have also lamented bitterly about similar ill-treatment meted to them by the same electricity power company in the country.

When contacted for his view on the situation, Mr. Segun Kuti-George, Chairman of the Nigerian Association of Small Scale Industrialists (NASSI), Lagos chapter, who expressed displeasure over the trend, lamented that the situation has discouraged and discontinued a great number of SME operators from their businesses. He noted that several cases have been reported by a number the NASSI members, and these cases are still receiving attention on his table.

In his reaction, Kuti-George said: “The way this trend is going, it will run many SMEs down in the country if no swift action is taken by the government.  I think the best way out of this is for us to exist in clusters. When we exist in clusters, it will go a long way to help us. By this, if the electricity power company is not favourable to our businesses, we would go ahead to get fuel to power our generating sets while we share the fuel cost to be paid among ourselves.

“Our clustering shouldn’t just be incubation, but in every other aspects. There are a lot of clustering operations in China, and it is helping them,” he observed. According to him, there are industrial estates in Lagos such as Ilupeju, Ikeja industrial estates, among others, that were established by the administration of Chief obafemi Awolowo. “They all started small, and today, they are all doing well. Without clustering, we are going nowhere,” he said.

The NASSI chairman lamented the unfortunate state of ‘crazy billing’ by electricity power supply firms, whereby what is obtainable in residential locations is synonymous to what is obtainable in commercial or business district areas.

“At home, they claim they are giving us estimated bills, and at work the situation is the same. What then are they estimating?” Kuti-George raged.

He however suggested the use of pre-paid meter as the major way out, saying, “With the way it is now, the use of pre-paid metres is still the best way out, otherwise, every other thing is criminal.”

The NASSI leader, who is also the founder and Chief Executive of Goshen Marbles, cited a similar instance where the electric power supply firm meted similar ill-treatment on him in his residence sometimes ago. According to him, the electricity power firm brought a consecutive bills, running into N20, 000 on monthly basis, to his residence. While he confronted officials of the firm, he was giving an unreasonable explanation that amazed him.

He said: “They told me that after all, residents in such an area have the caliber of people who should be able to afford such amount of money as a monthly bill.” The entrepreneur stated that the bill was eventually adjusted much later after much pressure was mounted on the electric power firm.

On his final view, Kuti-George advocated the swift intervention of the government as the most effective way of checkmating the excesses of the electric power supply firms.

“Government should intervene quickly on this issue. By doing so, they are not just helping the SMEs, but helping the nation as a whole, because it would aid provision of employment, generation of income for the government through taxes, as well as reduction of crime among the citizenry,” he said.


Published in the Business Eye’s print version, October 2016 edition.

Featured Image Credit: Huffington Post


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