A new study by the Nigerian Institute of Social and Economic Research (NISER) has revealed that firms in Nigeria spend as much as 82 per cent of their monthly turnover on production costs, largely due to soaring electricity tariffs.

The findings, presented on Tuesday, August 26, at a seminar in Ibadan themed ‘Balancing Electricity Tariffs and Consumers’ Wallets: Insights from Nigerian Households and Firms’ Ability to Pay,” also showed that households now receive an average of 10 hours of electricity daily, far below the 20-hour benchmark.

According to the lead researcher, Dr. Iyabo Olanrele, monthly grid electricity bills for households almost doubled from N17,647.49 to N34,942.04, a 98 per cent increase, while grid-related costs for firms rose by 92.2 per cent.

She noted that 67.5 per cent of firms consider the new tariff unaffordable, with larger, high-input businesses most affected.

“The study found that firms spend 82% of their monthly turnover on production costs, mainly due to the electricity tariff. Although 87.5% reported moderate electricity supply improvement, it is still below the 20-hour requirement.

“Grid electricity expenditure rose by 92.2% due to the tariff hike, which 67.5% of firms found unaffordable, and large-scale and high input cost firms were less able to afford the increase, while older firms showed more resilience.

“The study shows coping strategies adopted by households and firms in the face of the challenges posed by the increase in tariffs.

“While households adopt switching to solar, inverters, and energy-efficient appliances, which not all can afford, many firms take to renewable energy use, energy-saving measures, and efficient technologies, with some firms remaining undecided,” she said.

The report found that while 87.5 per cent of firms acknowledged moderate improvement in power supply, availability remains inadequate.

It also highlighted coping strategies such as households adopting solar, inverters, and energy-saving appliances, while firms turn to renewable energy and efficiency technologies to cushion the impact.

Speaking earlier, the Director-General of NISER, Professor Antonia Simbine, said, “The theme of the seminar is fully aligned with the Renewed Hope Agenda of the Federal Government, which places energy security, affordability, and sustainability at the heart of Nigeria’s economic transformation.

“This conversation is not just about electricity tariffs. It is about livelihoods, industrial competitiveness, and the pathway to national development. The Renewed Hope Agenda challenges us to design policies that make electricity not only reliable but also accessible and affordable, enabling households to thrive and businesses to compete globally

“The meeting, after robust discussions by energy experts and economists, recommended that NERC should enforce service reliability mandate by setting minimum threshold for DISCO infrastructural investment before future hikes; state governments should leverage the opportunity provided in the Revised 2023 Electricity Act to develop and promote a decentralized grid system for stable electricity supply; and the federal government should raise household income by implementing the 2024 new minimum wage to create some respites.”

The seminar had in attendance experts such as Dr. Hassan Mahmud, President, Nigeria Association of Energy Economics, Dr. Ekundayo Peter Mesagan of Pan-Atlantic University, Lagos, among others. (Nigerian Tribune)