High Electricity Bills Stifling Growth of E-Commerce Sector – Experts

Operators of e-commerce companies have identified costly electricity charges as a deterrent to investment and business development in Nigeria.

This is coming as the Association of Nigerian Electricity Distributors, ANED, reveals that less than 40 percent of electricity bills are paid by consumers and as a result higher tariffs are expected to be levied in a bid to plug the loss in power revenue.

Stakeholders’ state that with a recession poised to sweep through the economy, an unstable currency washing out capital security and epileptic power supply forcing a dependence on generators, the hike in electricity tariffs will limit industry growth.

Speaking on the issue, Kushal Dutta, managing director of Jovago Nigeria expressed, “One of the highest cost e-commerce companies in Nigeria cover is electricity. Because online-based business need constant power supply to function and deliver services to clients, we spend a bulk of our revenue which should go into increasing operations on buying diesel for generators that run almost 24 hours each day.

“Although we predict better market opportunities for the sector, there is need to curb this inflation in tariff pricing so investing companies can begin to thrive and achieve real growth,” Dutta said.

While consumers of power bemoan the instability and high cost of sourcing electricity, Sunday Oduntan, executive director of the Association of Nigerian Electricity Distributors, ANED, said that the high charges were dismissible in view of the low payment habits of Nigerians.

According to Oduntan in an interview granted to a national daily, consumers pay less than “40 per cent of their actual bills.” This revelation was made after electricity distributors began recording redline cash receipts on a quarterly basis.

“I’ve toured all the 11 Discos and I see the same pattern across board in terms of our peoples’ attitude with respect to the payment of electricity bills,” he said, “You give a bill of N5,000 and they’ll pay N2,000 and will tell you they will clear it next time. This is how it continues to pile up.”

With the government removing fuel subsidies and oil marketers refusing to sell diesel at pump prices, the cost of doing business in Nigeria is expected to double over the next three months especially as oil hits a benchmark price of $38 per barrel with the International Monetary Fund (IMF) predicting a further drop to $20 per barrel by mid-year.