The Manufacturers Association of Nigeria (MAN) has observed that more than ten years after, the privatization of the electricity industry has not yielded the desired results for the economy.
” The advice would be that the government should conduct 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, ” said Ajayi-Kadir, the Director-General of MAN.
MAN has severally advocated for an increase in electricity supply from the abysmal average of 4,000MW of electricity per day for over 200 million people, whereas Nigeria needs more than 30,000MW of electricity to appreciably meet the growing electricity demands by businesses and households in the country
In a position statement released to the media on Thursday in Lagos, the MAN DG, recalled that it was based on the critical importance of energy security in achieving the industrial aspiration of Nigeria, that the Power Sector was privatized in 2013 to improve the scale of energy supply to the nation, particularly the industries.
He said: ” The operators in the power sector’s value chain lack the technical and financial capacity to operate and deliver optimally.
” The installed capacity has been consistently put around 10,000MW and it has not been fully utilized due to the limited capacity of the GenCos and DisCos to generate and distribute adequate electricity supplynationwide.
“Despite the inability to meet consumer demand, we have witnessed consistent increases in tariffs without a commensurate and good-quality supply.”
He referenced the NBS data which indicates that the 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 when the tariff increase of over 230 percent was implemented. Thus, indicating a 5.03 percent decrease year on year and 2.72 percent quarter on quarter.
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According to him, MAN has severally advocated for an increase in electricity supply from the abysmal average of 4,000MW of electricity per day for over 200 million people, whereas Nigeria needs more than 30,000MW of electricity to appreciably meet the growing electricity demands by businesses and households in the country.
He further asserted that the incessant increases in the electricity tariffs in Nigeria are hindering the performance of the sector and the growth of the economy. ” Incidentally, no nation can attain significant industrial development without energy security, which is timely access to sustainable and cost-effective energy,” said Ajayi-Kadir.
The MAN DG emphasized that electricity is a critical input in manufacturing processes, and it has a significant impact on production costs and prices of products.
According to him, sustainable and low-cost energy supply provides incentives for scale production and competitiveness of the industrial sector.
He warned that the 65 percent proposed increase in the electricity tariff 65 percent, from N116.18 to N193.63 per kilowatt-hour, is inimical to the competitiveness of Nigerian products and businesses as it will further exacerbate the high cost of production, worsen the current inflationary pressure, aggravate the pressure on the disposable income of the average Nigerian, increases the unsold inventory of manufacturers, erodes their profit margin, increases unemployment rate and leads to the closure of more private businesses.
The persistent increase in tariff means that consumers will continue to bear the brunt of the inefficiency in the electricity value chain.
” As it stands, manufacturers are disadvantaged as the increase cannot be transferred to consumers who are currently battling with low purchasing power.
However, I am not certain that the Federal Government has reached the conclusion that the electricity tariff would be increased. I hope not. “
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