*Say cost of products, inflation will rise further
With the plan to increase electricity tariff, manufacturers have urged the federal government to ensure that at least 90 per cent of electricity consumers are metered to enhance consumption reflective electricity bill payment.
The Manufacturers Association of Nigeria (MAN) stated this in a release sent to LEADERSHIP at the weekend.
MAN, also warned that cost of products produced in the country would go up and this will increase the prices of goods and services should government approve upward adjustment in electricity tariff.
The director-general of MAN, Segun Ajayi-Kadir, stated that, it is highly concerning for manufacturers to witness the electricity tariff skyrocketing beyond the present embattling high prices, starting July 1, 2023, saying that a 40 per cent hike at this time is simply outrageous.
Segun Ajayi-Kadir, lamented that the absence of stable, effective and fairly priced electricity supply in Nigeria has been a long-standing challenge for manufacturers.
According to Ajayi-Kadir, the worrisome development has compelled many manufacturing industries to supplement the unreliable electricity supply with alternative energy sources.
Regrettably, he said the available alternative energy sources such as diesel have become exorbitantly expensive.
On average, surveyed data by MAN suggested that manufacturers spent at least N144.5 billion on sourcing alternative energy in 2022, up from N77.22 billion in 2021. This translates to about 87 per cent increase in the cost of access to alternative energy sources by manufacturers within a year. In the last eight years, electricity tariff has been increased by 186 per cent.
Ajayi-Kadir pointed out that the fact that government itself owes N75 billion in unpaid electricity bill is indicative of how burdensome the cost of electricity has become.
He said, a further rise in electricity tariff could lead to high costs of production, explaining that, “higher electricity tariff will directly increase the cost of production for manufacturers. Already, we have energy constituting between 28 to 40 per cent in the cost structure of manufacturing industries.
MAN DG noted that, “the expectation of the manufacturers is that the federal government and NERC will ensure improvement in electricity generation, transmission and distribution that will lead to adequate and reliable electricity supply in the country, rather than increasing the tariff on the mere 4000MW to meet all revenue needs of stakeholders in the electricity supply industry.”
He also said, government should formulate electricity policies that will aid investment in energy industry to increase generation capacities that will usher in large scale production of electricity and ensure effective implementation of the recent Electricity Act (2023) that is aimed at increasing the electricity supply in the country.
According to him, “there is an urgent need for the diversification of energy sources and intensifying infrastructure investment in the power sector; eradicate outrageous bills by closing the metering gap through the liberalisation of ultimate users’ access to effective mass metering; ensure the connection of all consumers to the electricity grid to avoid free riding and unfair charges on the few connected consumers; and States and private investors should rise up to the challenge by taking advantage of the Electricity Act 2023 to eradicate the energy poverty of their people.”
Ajayi-Kadir noted that, “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.”
previous post
