The Effect of Electricity Tariff and Self-Generated Power Supply on Business Performance in Nigeria

Abstract

Industrial development is a process by which a nation acquires a competence in the manufacturing of equipment and products required for sustainable development. Technology is considered the prime factor in this regard; industrial development and technological development are interdependent and interrelated, yet, they both depend on adequate energy supply. The aim and objective of this study is to examine if electricity tariff and self- generated electricity constitutes significant impact on business performance and if there any significant difference between electricity tariff and self – generated source of power on business performance. The research population for this work comprises of all businesses in Ondo State cutting across servicing companies, manufacturing companies and wholesale/retail businesses. The primary source of data collection was employed and the stratified random sampling method was used to select the required sample size.  The research instrument used for data collection was questionnaire and One hundred (100) copies of structured questionnaire were administered and eighty- two (82) were returned, representing 82%. The data collected were analyzed through the Ordinary Least Square (OLS) estimation model. From the findings, it was discovered that both high electricity tariff and self- generated electricity cost affect firms’ performance, indicating that they have significant impact on business performance. Also the result reveals that there is significant difference between electricity tariff and self- generated electricity on business performance, since a rise in the electricity outage will trigger rises in generator usage. The major recommendation is that, government should immediately provide tax relief for all privately generated power for industrial output, knowing that improvement in the reliability of public power supply is needed to reduce generator usage, and also reduce cost of production, which in turn will enhance price control policy of the government. Though, many firms would still need to maintain their own back-up generators in order to meet international quality standards for participation in export markets.

Keywords: Business, Business Performance, Electricity, Development, Tariff, Self-Generator Electricity.