Iliyasu Abdullahi Bah
Small and medium-scale enterprises (SMEs) in Nigeria’s North-East are struggling to stay afloat as erratic power supply and inequitable electricity tariff classification introduced by the Nigerian Electricity Regulatory Commission (NERC) continue to impact productivity, increase operational costs, and threaten job security.
Since the introduction of NERC’s service-based tariff structure in November 2020, customers have been segmented into five categories (Bands A to E), based on their average daily hours of electricity supply. Band A customers are entitled to a minimum of 20 hours of power daily, while Bands B to E are designated for 16, 12, 8, and 4 hours respectively.
Yet, in practice, many SMEs in Bands B and C across the North-East say they receive far less than the allocated hours, while being billed disproportionately. In contrast, Band A consumers primarily located in urban centres receive preferential supply to help Distribution Companies (DisCos) avoid regulatory sanctions, according to a 2024 performance report by NERC.
A Daily Trust investigation highlighted this discrepancy, noting that many Band A customers still don’t receive the guaranteed 20 hours, while underserved bands endure blackouts that last up to 20 to 22 hours daily.
In Potiskum, Yobe State, Mallam Sani, a maize grinder who has operated for over two decades, said small businesses are being forced to rely on costly diesel generators just to remain operational.
“We don’t get adequate power at all. Our earnings have drastically reduced. Diesel alone takes over 70 to 72 per cent of what we earn,” he told The Journal.
He added that the hardship worsens during the lean season, when food prices rise and customer demand drops.
“Government should bring proper solutions. This classification is unfair to small businesses,” he said.
In Azare, Bauchi State, Maryam Abdullahi, a tailor and fabric merchant, lamented the widening inequality in power distribution under the tariff structure.
“We work before we earn. But how can we work when we don’t have light for more than two or three hours a day?” she asked.
According to NERC’s April 2024 tariff report, Band A customers who make up just 17 per cent of grid-connected users receive the highest supply, while the remaining 83 per cent, largely low-income consumers and SMEs in Bands C to E, receive far less than the allocated supply hours.
Figures from the World Bank and the National Bureau of Statistics (NBS) show that only 56.6 per cent of Nigerians currently have access to electricity, with average national supply hovering around 12 hours daily, a figure that drops significantly in the North-East.
Following the removal of the petrol subsidy in mid-2023, generator usage has become increasingly unsustainable for small businesses. Data from the Major Energy Marketers Association of Nigeria (MEMAN) indicates that diesel now sells for over ₦1,200 per litre, while petrol has surged to ₦700 and above per litre in many parts of Bauchi, Gombe, and Yobe.
“Switching to generators is not a real option anymore,” said Maryam, the tailor. “We either close shop early or lose customers.”
According to the World Bank, Nigeria loses approximately $26.2 billion annually, around 2 percent of national GDP, due to unreliable electricity. The impact is particularly severe on SMEs, which account for 96 per cent of businesses and 84 percent of employment, according to SMEDAN’s 2022 survey.
A 2023 International Energy Agency (IEA) report also found that less than 60 per cent of Nigerians have access to power, with the North-East experiencing the lowest electrification rates nationally. In many rural communities, only 30 per cent are connected to the national grid, and even those connections are plagued by persistent outages.
The Nigeria Electrification Project revealed that rural areas in Borno, Yobe, Gombe, and Bauchi are among the least served by national grid infrastructure, with significant dependence on off-grid sources such as diesel generators and solar power both of which have become more expensive post-subsidy removal.
The Nigerian Economic Summit Group (NESG) in a 2024 policy briefing warned that inadequate electricity supply is undermining public infrastructure and private sector development.
“Electricity supply has a direct effect on the functioning of infrastructure. Where it is poor, schools cannot run, hospitals lose refrigeration for medicines, and boreholes dry up because water pumps stop working,” NESG said.
The National Bureau of Statistics also confirms that 72 per cent of MSMEs across the country cite electricity as the most significant constraint to their operations.
Energy policy advocates and civil society organisations are calling for an urgent review of the Band classification framework, which they argue disproportionately benefits urban elites at the expense of grassroots businesses.
“It’s time for a transparent review of the Band classification. It’s not enough to promise 24-hour electricity when only a small elite enjoys it,” said Mohammed Bello, a programme officer with the Coalition for Energy Equity in Bauchi.
“Small businesses are the engine of Nigeria’s economy. They deserve more reliable supply, not discriminatory policies,” he added.
While NERC originally promoted the Band model as a mechanism to attract investment and drive service delivery, evidence from the North-East suggests that the policy is deepening structural inequality in energy access, particularly in regions already marginalised by conflict and poverty.
Until NERC conducts a transparent audit of power allocation practices and makes data publicly available to track compliance, small businesses in the North-East may continue to pay for electricity they do not receive, while battling skyrocketing fuel prices, shrinking profits, and growing insecurity.