The Manufacturers Association of Nigeria (MAN) has harped on the importance of sustainable and low-cost energy supply to the manufacturing sector in terms of the incentives for small and large scale production and competitiveness of the industrial sector.
The association’s Director-General, Mr. Segun Ajayi-Kadir, who expressed the industrialists’ concerns while reacting to incessant tariff increases in the country, said: “Electricity is a critical input in manufacturing processes, and it has significant impact on production cost and prices of products. Therefore, it goes without saying, that incessant increase in electricity tariff in Nigeria is hindering the performance of the sector and growth of the economy.”
According to him, no nation can attain significant industrial development without energy security, which is timely access to sustainable and cost-effective energy.
Ajayi-Kadir lamented that despite the privatisation of the power sector, the exercise had not yielded the desired results because the operators in the value chain lacked the technical and financial capacity to operate and deliver optimally.
He recalled that the manufacturers’ group had severally advocated for increase in electricity supply from the current average of 4,000MW of electricity per day for over 200 million people in a country with electricity demand is estimated to be 30,000MW in order to meet the growing electricity demand by businesses and households in the country.
Ajayo-Kadir pointed out that the proposed increase in electricity tariff would be inimical to the competitiveness of Nigerian products and businesses as it will further exacerbate the impact of high cost of production, worsen the current inflationary pressure, aggravate the pressure on the disposable income of the average Nigerian, and increase the unsold inventory of manufacturers, among other negative impacts.
He argued that the persistent increase in tariff meant that consumers would continue to bear the brunt of the inefficiency in the electricity value chain, adding that as it stands, manufacturers are disadvantaged as the increase cannot be transferred to consumers who are currently battling with low purchasing power.
The Director-General further clarified: “However, I am not certain that the Federal Government has reached the conclusion that electricity tariff would be increased. I hope not.
“The advice would be that Government should commission a review of the performance of the DisCos after the last unwarranted increase; conduct a study on the impact of the increase on the manufacturing sector in particular, and businesses and households in general; sincerely and critically interrogate the so-called cost reflective tariff template of the DisCos, and audit their level of commitment to investment in distribution infrastructure” he added.
Available data from the National Bureau of Statistics (NBS) showed that the nation’s electricity supply stood at 5,909.83 (Gwh) in Q2 2023 but reduced to 5,769.52 (Gwh) in Q1 2024 and 5,612.52 (Gwh) in Q2 2024, despite tariff increase of over 230%.
