Electricity Act 2023 ‘ll boost profit margin –MAN
President Tinubu’s recent signing of the Electoral Act Bill has received the commendation of the the Manufacturing Association of Nigeria (MAN) which expressed optimism that the act, if well implemented would boost the profit margin of manufacturers among others.
Applauding the move by the president, the Director General of the Association, Segun Ajayi-Kadir, lamented the huge cost its members usually spend on alternative energy which he said surged from N77.21 billion in 2021 to N144.47 billion.
Ajayi-Kadir was optimistic that the new Act if fully implemented could change the narrative by stabilising the supply of electricity to infant manufactures and aid their planning for optimal delivery.
“In light of the huge energy deficit occasioned by the age-long challenges in the power sector, newly inaugurated President Bola Ahmed Tinubu has set the ball rolling by signing the Electricity Act 2023 which is meant to be a game changer to address the numerous constraints within the sector.
“If fully implemented to the letter, the new Electricity Act will see to the drastic fall in the cost of alternative energy incurred by our members and we expect this to boost our profit margin.”
He said no doubt, the current power supply is apparently inadequate to satisfy the energy requirements of the manufacturing sector and the entire population.
“As the largest energy access deficit in the world, Nigeria’s shortage of electricity supply has been identified as a hindrance to the profitability of manufacturers with an annual economic loss valued at about N10.1 trillion or 2 percent share of the country’s GDP.” He decried the unfavourable situation which has positioned the country among the worst countries to do business with a rank of 171 out of 190.
The MAN boss supported the removal of the fuel subsidy, which he said was another reflection of the boldness and commitment of the new administration towards the diversification and decentralisation of the power sector.
He however noted that to avoid truncating the potential benefits of the Electricity Act, the government must tighten the security infrastructure as no investor wants to do business in an embattled economy.
“Render legal, financial and technical supports to state governments yet to establish electricity market laws.
“State governments should partner with existing agencies and operators in the power sector as the costs of building new power distribution networks can render the investment less lucrative.
“Streamline NERC and states’ regulations to avoid bottlenecks for multistate investors.
Related NewsReal estate firm cushions economic hardship with smart homesBuilding Collapse: Why you must insure your building –StakeholdersNigeria Air: Inconsistencies that trail former aviation minister’s interview
“Address the uneven distribution of gas to avoid delay in states’ execution of mega-power projects.
“ While states concentrate on small confined democratized power supply systems, there is need to have in the pipeline a long-term plan of ensuring operational efficiency of the national grid.
‘The success of the Act largely rests on its effective implementation. Therefore, new President should appoint a committed and incorruptible Minister of Power that has broad experience of the operations and politicking within the power sector.
“The power sector is highly capital-intensive. Therefore, there is need to reduce the lending rate to encourage private investments in min-grids and renewable energy.
‘ Quickly and adequately address the hitches surrounding the fuel subsidy removal by providing transparent palliative measures and socio-economic infrastructure that directly and immediately mitigate its untold hardship on businesses and the masses.
Reeling out other favourable implications of the act, he said it would
help actualize a cost –reflective tariff considering the healthy price competition it will bring between the states and private investors.
“ Improvement in inflow of Foreign Direct Investment (FDI) and Manufacturing Performance
“ Increase in IGR, Improved Infrastructure and Less Tax Burden on Manufacturers.
“More Investment in Renewables
The new Act seeks to open greater investment opportunities in renewable energy. For manufacturers, investment in renewables like solar will not only promote cleaner climatic environment but ensure that energy consumption is cost efficient. The cost savings will directly improve profit margin and promote further manufacturing investments.
“The empowerment of private manufacturing companies to generate their own electricity will unleash massive investment in backward integration activities which will no doubt be a major enabler of energy security within the sector.
“Enhance Stable Power Supply and Proper Planning. The new Act if fully implemented can re-write the story by stabilizing the supply of electricity to infant manufactures and aid their planning for optimal delivery.
