Lagos, June 23, 2023 -The Manufacturers Association of Nigeria (MAN) says its members spent N144.5 billion on alternative energy sources to power their companies in 2022.
Segun Ajayi-Kadir, MAN Director-General, told journalists in Lagos on Friday that the amount was N77.22 billion in 2021.
He said the association was against the planned increase in electricity tariff from July 1 as it was too outrageous
Ajayi-Kadir said prices of their products were currently uncompetitive due to the high cost in powering their generators.
He said a 40 percent tariff increase would engender higher costs of production, lower profit margin and paralyse manufacturing activities.
Ajayi-Kadir stated that the absence of stable, effective and fairly priced electricity supply in Nigeria had been a long-standing challenge to manufacturers which compelled them to supplement with alternative energy sources.
Regrettably, he said that the available alternative energy sources such as diesel had become exorbitantly expensive.
He said the fact that the government itself was owing N75 billion in unpaid electricity bill was indicative of how burdensome the cost of electricity had become.
“Already, we have power constituting between 28-40 percent in the cost structure of manufacturing industries.
“You can imagine the impact on manufacturing industries that are energy-intensive such as metal processing, heavy machinery, and chemicals manufacturing.
“A spike in the electricity tariff will erode the profit margin of the manufacturers and reduce their ability to expand operations and create new jobs.
“Manufacturers will ultimately pass on the additional cost to the consumers of their products and this will increase the cost of the products in the market and complicate the rising inflation rate in the country.
“Also, the sector’s competitiveness will definitely worsen as the high cost of the products will make locally produced items less competitive when compared with imported alternative,” he said.’
Ajayi-Kadir advised that instead of increasing tariff, the Federal Government and Nigerian Electricity Regulatory Commission (NERC) should ensure improved electricity generation, transmission and distribution to meet the revenue needs of the electricity supply industry stakeholders.
He stressed that government should ensure that at least, 90 percent of electricity consumers were metered to ensure consumption-reflective electricity bill payment.
MAN boss tasked the government to formulate electricity policies that would aid investments in the energy industry to increase generation capacities and usher in large-scale production of electricity.
“There is an urgent need for diversification of energy sources and intensifying infrastructure investment in the power sector.
“As it is today, the manufacturing sector, which is the engine of growth, is still struggling as a result of inclement production environment in Nigeria.
“The expectation is that government will engage in extensive and intensive consultations with the manufacturers; focus on measures that will salvage the sector and halt the trend of shutdown of factories, knowing the implications and the multiplier effects on employment and the economy.
“Care should be taken to avoid introducing burdensome measures that will further strangulate the manufacturing sector and the whole economy.’’ (GBN)
