Small and Medium Enterprises across the country are struggling to survive as rising energy costs continue to eat deep into their profits, the President of the Association of Small Business Owners, Femi Egbesola, has said.

He warned that many businesses are already shutting down, while others operate below capacity due to soaring fuel and electricity costs.

According to him, the cost of generating power has surged, with business owners now expend up to 60 per cent of their profits on energy, compared to about 40 per cent previously spent.

“Energy cuts across all business sectors. We all heavily depend on it and it determines our survival most times. When there is a sharp increase, it drastically affects SMEs with thin profit margins.

“Imagine making profit and putting 60 per cent into electricity. That is huge. That is why many companies now operate below capacity, waiting for public power supply because running generators has become unsustainable,” Egbesola said.

He explained that businesses relying on generators often pass the increased costs to consumers, but weak purchasing power has led to declining sales and shrinking profits.

He stressed that improving electricity supply would solve a significant part of the problem.

The president also urged the government to consider temporary subsidies on diesel and other energy sources to prevent further job losses and business closures.

“Many of our members are suffering. Businesses are very sick. Some small business owners are even shutting down and taking up menial jobs like commercial motorcycle riding, just to survive. At a time when diesel prices have increased by about 100 per cent, the government should consider some level of subsidy to save jobs and industries,” he added.

Egbesola warned that rising energy costs could erode the country’s global competitiveness, as higher production costs lead to increased prices of goods.

“When we become less competitive, we won’t be able to earn foreign exchange like before, and that will affect the stability of the naira. It is a ripple effect,” he said.

He said despite the country being an oil-producing country, the impact of rising energy costs had been severe, calling for cushioning measures from the Federal Government.

Suggested solutions include the provision of Compressed Natural Gas alternatives, support for renewable energy adoption, and incentives such as tax waivers for businesses investing in alternative power sources.

“We were told subsidy savings would be used to provide CNG vehicles and generators, but we are yet to see them. The government needs to act and provide alternatives that will cushion the effect,” he said.

Egbesola also urged authorities to support local production of renewable energy solutions to make them more accessible and affordable for SMEs.