Dare Babalola
The Centre for the Promotion of Private Enterprise (CPPE) has warned that Nigerian businesses are facing an existential threat from escalating global energy prices, triggered by geopolitical tensions in the Middle East, and has called on companies and the government to take immediate action to mitigate the impact.
In a statement issued on Sunday, CPPE Chief Executive Officer, Dr. Muda Yusuf, noted that the current surge in energy prices has intensified cost pressures on businesses, particularly small and medium enterprises (SMEs), which are heavily reliant on petrol and diesel generators due to persistent electricity supply challenges.
Yusuf noted that the resulting increase in transport and distribution costs has led to a significant escalation in operating expenses, mounting pressure on profit margins, and heightened risks to business sustainability.
Dr. Yusuf explained that the situation is further complicated by the already challenging operating environment, characterized by high inflation, elevated interest rates, and weak consumer purchasing power.
He warned that without deliberate adjustments by businesses and supportive policy interventions from government, rising energy costs could significantly erode profit margins, weaken business sustainability, and dampen economic growth.
To address the crisis, CPPE recommended that businesses strengthen energy efficiency by reviewing energy consumption patterns, minimizing waste, and maximising productivity per unit of energy used.
CPPE also encouraged companies to diversify energy sources, exploring alternative solutions such as solar power systems, hybrid energy systems, and gas-powered generators.
Improving logistics and supply chain efficiency, adopting flexible pricing and cost management strategies, and leveraging cluster-based solutions are also crucial, Yusuf added.
On the part of government, CPPE urges the expansion of fiscal and regulatory incentives to encourage businesses to adopt renewable energy solutions, such as tax incentives for solar installations and import duty waivers for renewable energy equipment.
He said the government should also provide affordable financing for energy transition, strengthen domestic refining capacity, and improve electricity supply reliability.
“The most sustainable solution to Nigeria’s high energy cost environment lies in improving the reliability and availability of grid electricity,” Dr. Yusuf emphasized.
“Government needs to intensify efforts to expand electricity generation capacity, strengthen transmission infrastructure, and enhance the efficiency and financial viability of electricity distribution networks across the country.”
CPPE urged businesses and government to work together to mitigate the impact of the energy price shock and strengthen the resilience and competitiveness of Nigeria’s business environment.
“With the right combination of proactive business adaptation and supportive public policy, Nigeria can significantly mitigate the impact of the current energy price shock and strengthen the resilience and competitiveness of its business environment,” Dr. Yusuf said.
