Abstract
This study evaluated the effects of electrical power outages on Small and Medium Scale Enterprises (SMEs). The study was guided by two specific objectives of determining the cost of alternative sources of power supply and its impact on the profitability of businesses of selected SMEs in Elelenwo community in Obio/Akpor Local Government of Rivers State and to suggest possible ways of reducing the power outages in Elelenwo Community. The costs of power supply using private power generation and that of public power generation from Port Harcourt Electricity Distribution (PHED) were collected from selected SMEs in the study area. Findings established the fact that electrical power outages have significant negative effects on the businesses of small and medium scale enterprises (SMEs) which in turns affect their profitability and sustainability. This was established by finding the correlations of the costs of running businesses with private power generation and that of using public power generation for selected SMEs and the results yielded negative correlation coefficients. The study also suggested possible ways of reducing the power outages.
Highlights
Electricity is unarguably, an important component of any production process
The aim of this study is to evaluate the effects of electrical power outages on small and medium scale enterprises (SMEs) in Nigeria
This study focused on the evaluation of the effects of electrical power outages on small and medium scale enterprises in Nigeria and covered some small and medium scale enterprises in Elelenwo community of Obio/Akpor local government area in Rivers state, that their businesses have great dependence on electricity supply
Summary
Electricity is unarguably, an important component of any production process. when its supply is limited, it has the potential to directly and/or indirectly affect the economic activities of firms. In achieving this, according to [2] an analytical frame work known as production function is used In this analysis, electricity contributes directly to firms’ output as a separate input and indirectly as a determinant of the extent to which other direct input such as capital equipment is used. An approach in which a survey is carried out can be employed This subjective method is based on self assessment by asking firms to quantify the loss they incur as a result of electrical power outages. For this approach, there is a great assumption that firms will provide relatively accurate valuation of the costs of frequent replacement or repairs of damaged machinery or equipment or to quantify the lost output due to idled inputs. There are many setbacks that can beset the outcome, as there is tendency for many firms to overestimate the incurred costs, and thereby overemphasize the impediment that electrical power outages constitute to their business activities [1]
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