Fuel subsidy removal leads to sharp decline in generator sales across Nigeria

A recent survey conducted by Nairametrics following President Bola Tinubu’s announcement on May 29 declaring an end to fuel subsidies has revealed a notable decline in the sales of gasoline generator sets in Nigeria.

The survey, which covered major generator markets in Lagos, reported that all the generator dealers experienced a significant drop in sales, with most of them unable to sell more than half of their usual stock over the past month.

The direct correlation between this sudden sales slump and the recent increase in fuel prices has been a cause for concern among market participants.

Paul Dike, a dealer at the electrical section of Alaba International Market, pointed out that the spike in fuel prices has directly affected sales. In response, even shop owners in the Alaba market have resorted to pooling their resources to generate electricity from big diesel generators, aiming to cut costs.

He indicated that most of the generators imported by Alaba merchants are now shipped to northern Nigeria or neighbouring West African countries.

This shift is attributed to the fact that many Nigerians are finding it increasingly difficult to afford the rising cost of fuel. Instead, they are turning to alternative solutions such as solar panels to power their homes.

Additionally, some areas in Lagos and eastern Nigeria have reported improved power supply over the past two months, contributing to the reduced demand for generators.

Samuel Chikeleze, a major importer of generators at the Lagos Trade Fair, lamented that his sales have dwindled significantly.

Previously, he would import two or three containers of generator sets, which would be sold within a month.

However, in the last month, he has struggled to sell off even one container. Chikeleze reported that Lagos buyers seem to be less interested in purchasing generator sets, with most of the sales now occurring in the northern regions of Nigeria or neighbouring countries.

The high fuel prices are significantly impacting the business of generator sellers.

“People are just not coming to buy as they did any longer. Lagos buyers just seem to be on vacation. Most of our sales now are either toward the northern part of the country or in neighbouring countries. The high price of fuel is really taking a toll on us generator sellers.”
Gozie Nwachukwu, a dealer in Ogba, Lagos, echoed similar sentiments, stating that it appears people are no longer enthusiastic about buying petrol generators.

He noted that business was thriving in the past, but it has significantly declined in recent weeks due to the high cost of fuel. Many Nigerians, he added, can no longer afford to buy fuel, leading to decreased usage of their generators.

“I cannot buy N2,500 fuel that will last just four hours. How many times in a month will I do that when I need money to feed my family? Let the generator rest for now,” said George Orsu, a resident of Surulere in Lagos.”
Nairametrics also spoke with households affected by the fuel price increase, and they confirmed that there is less incentive to use their generators due to the high cost of fuel.

George Orsu, a resident of Surulere, Lagos, shared his plight, stating that buying fuel at such high prices becomes a burden on his family’s finances. He emphasized the need to prioritize essential expenses over running a generator.

Another resident, Moses Egwu, who lives in Alimosho Local Government Area said the cost of living has risen so high that running a generator is the last thing on his mind.

“I will make sure that my rechargeable lights are always charged, nothing more, nothing less,” Egwu said.
He revealed to Nairametrics that his wife no longer cooks for the week because, in the eventuality of a power outage for a week, the family won’t stand the risk of losing a pot of soup because he can no longer afford the cost of fueling his generator.

As if to confirm the trend, scores of filling station operators say the number of customers coming to buy fuel in jerry cans has reduced steeply.

Nairametrics confirmed from filling station operators of Eterna, Mobil, and Total in the Alimosho and Ikeja areas of Lagos, who stated that there is a general fall in the number of persons coming to their stations to fill their jerry cans.

As a consequence of the decline in generator usage, the survey also revealed that generator repairers are experiencing a downturn in business.

Sodiq, a generator repairer who works near Adeoni Estate in the Berger axis on the outskirts of Lagos, said his customers hardly patronize his trade nowadays. Sodiq spends most of his workday in the Okada business to make ends meet.

Chinagorom Okoye, also a generator repairer in Igando, Lagos, expressed a similar experience.

He told Nairametrics that business has been bad over the past several weeks, specifically after the increase in the price of fuel. He said he hardly makes enough money to feed his family nowadays.

“Before now, I would go home with up to N10,000 after the day’s work; but I hardly take more than N2,000 home over the past one month,” he said.
If the current trend continues, it could lead to increased poverty levels. Brian Amonu, the managing director of Data Analytics and Solutions Nigeria Limited, estimated that 40% of the 50 million homes in Nigeria rely partly on generator sets for power.

With an estimated 20 million generator sets needing repairs from time to time, a substantial reduction in generator usage could jeopardize the livelihoods of many repairers.

As Nigeria grapples with the impact of the fuel subsidy removal, the government and stakeholders may need to address the potential economic consequences and explore measures to alleviate the burden on citizens and businesses reliant on generators for power.