Business
Real estate operators groan over hike in electricity cost

The commercial real estate market is reeling from a perfect storm of challenges, including soaring electricity bills, rising operational costs, and a sluggish post-pandemic recovery. With the recent restructuring of electricity tariffs by the Nigerian Electricity Regulatory Commission (NERC), businesses are seeing their utility costs skyrocket.
Under the new classification system, Band A customers—who were previously paying N68/kWh—now face a staggering rate of N209.50/kWh, a 209 percent increase. This dramatic surge has pushed commercial utility bills to unprecedented levels, severely impacting operational budgets.
Facility managers are lamenting that a budget of N50,000, which once bought 755 units of electricity, now covers only 225 units. Similarly, N25,000 previously purchased over 400 units but now only buys 372.2 units. This has exacerbated the financial strain on businesses, already struggling with high diesel costs for generators, which have surged to over N1,100 per litre.
The impact is evident across various sectors. Many commercial tenants are grappling with increased service charges, including security and maintenance costs, which have risen by over 60 percent. This escalation in expenses is dampening demand for commercial spaces, stalling rental growth, and affecting profitability.
Facility manager Alfred Osagie noted that businesses are being forced to cut down on generator use and air conditioning to manage costs. “Instead of running power from 8 a.m., malls now operate generators from 9 a.m., and some spaces only use air conditioners in the afternoon,” he explained. This shift is part of a broader trend towards smaller, more energy-efficient buildings.
The situation is further compounded by reports of higher electricity bills causing disputes between tenants and facility managers. Rogba Orimalade, a former chairman of NIESV, revealed that some malls have seen their electricity bills triple, from N1.5 million to around N4 million monthly.
Uzo Oshogwe, CEO of Afriland Properties Plc, echoed these concerns, describing the current environment as “frustrating” for businesses. In response, her firm is exploring alternative energy solutions, such as solar power and inverters, to mitigate the impact of skyrocketing electricity costs.
As Nigeria’s commercial real estate sector grapples with these unprecedented challenges, the need for sustainable and cost-effective energy solutions has never been more urgent.