The poor electricity supply in the country is increasing the cost of production for manufacturers of plastic products in Nigeria, posing a major disincentive for continuous investment in the sector.
The General Manager, Pentagon Plastic Industries Limited (PPIL), Mr. Shyam Barakale, stated this during his chat with journalists on Monday.
He added that one of the biggest challenges facing plastic manufacturing outfits was the cost of providing their own power.
“If regular and consistent electrical power can be sourced from the grid, we can easily concentrate on our core activity which is plastic manufacturing rather than investing in building and maintaining power plants,” Barakale said.
According to him, lack of regular power compelled the company to invest in its own power source, relying on Clarke Energy, a multinational specialist in distributed power generation solutions, to set up its own power.
THISDAY learnt that Clarke Energy provided a 1.8MW gas power plant for PPIL which the company purchased and regularly maintains.
“With Clarke Energy, we have a partnership that goes back to 2014. The company carried out a technical study and recommended the deployment of a gas power plant. It has been serving us well since 2015.
“The gas generating set comes at a very high cost but it has also given us significant cost savings and increased our production efficiency,” he said.
More specifically, the leadership of both companies enjoys an excellent relationship, which has helped to facilitate a seamless scheduled 30,000hours overhaul maintenance on their 1.8MW single module Jenbacher gas engine last year since its commissioning,” the Managing Director of Clarke Energy, Yiannis Tsantilas, said.
However, apart from the electricity challenge, the PPIL GM revealed that plastic manufacturers also contend with the lack of feedstock for producing high-quality plastic products.
According to Barakale, plastic feedstock, a byproduct of the petroleum industry refining process is a very capital-intensive venture and due to Nigeria’s low refining capacity, it has to source raw materials from outside the country.
“We have to invest a lot in raw material sourcing and this involves sourcing for foreign exchange which makes us vulnerable to volatile exchange rates. This adds to production costs and often results in delays.
“Looking at the volumes of raw materials imported into the country, you would see that if Nigeria has a bigger refining capacity, a lot of the foreign exchange paid to import them would be saved, he noted.
According to Barakale, the Nigerian market presents many opportunities for plastic manufacturers with its large population and strategic location to serve other markets in Africa.
He disclosed that PPIL, in its 19 years of operation, has contributed to the growth of the Nigerian economy including employing about 500 Nigerians and that its export of quality plastics contributes to foreign exchange earnings for the country.
