- The Manufacturers Association of Nigeria (MAN) has called on the Federal Government to conduct a transparent review of the electricity tariff structure.
- According to the MAN DG, electricity supply to industries showed some improvement in the first half of last year (H1 2024), with average daily supply hours increasing to 11.28 hours per day.
The Manufacturers Association of Nigeria (MAN) has called on the Federal Government to conduct a transparent review of the electricity tariff structure, saying that the 250 per cent increase in electricity tariff by the Electricity Distribution Companies (DisCos) significantly raised manufacturers’ cost of electricity.
MAN also said this, coupled with ongoing power outages, placed additional financial strain on the manufacturing sector. Therefore, it said a transparent review of the electricity tariff structure, among other key actions, will ensure the tariff reflects the true cost of production while being fair and sustainable for both businesses and consumers.
Speaking at a forum in Lagos recently, MAN Director General Segun Ajaiyi-Kadir lamented what he described as “lack of tariff transparency” in the Nigerian Electricity Supply Industry (NESI) and called for increased transparency in electricity tariff changes and the introduction of an outage compensation mechanism.
He specifically said as part of key actions to revitalise the industrial sector this year, the Federal Ministry of Power should develop a framework for stakeholders’ engagement on power tariff structure adjustment and for offsetting the effect of tariff hikes on manufacturing in Nigeria.
According to the MAN DG, electricity supply to industries showed some improvement in the first half of last year (H1 2024), with average daily supply hours increasing to 11.28 hours per day. He, however, regretted that the increase in electricity tariffs by 250 per cent by DisCos significantly raised the cost of electricity for manufacturers.
Unsurprisingly, the cost of providing alternative power continued to rise, with manufacturers, according to Ajaiyi-Kadir, spending N238.31 billion on alternative energy sources in H1 2024, a 7.69 per cent increase from H2 2023.
“The surge in costs was driven by higher prices for diesel, gas, and other energy sources, as well as the need for manufacturers to invest in self-energy generation due to unreliable power supply from the national grid,” he said.
He listed other options to overhaul the energy sector to include incentivising investment in renewable energy, facilitating investment in the modernization and reinforcement of the power infrastructure, including feeders, transformers, and distribution networks, to reduce technical losses and improve the reliability of power supply.
Ajaiyi-Kadir also urged the Federal Government to direct the Nigerian Electricity Regulatory Commission (NERC) to review the high electricity tariff for Band A Customers as no manufacturer has access to the stated 20 hours minimum of electricity supply per day.
He also wants government to commence the effective implementation of the Electricity Act 2023 by judiciously utilising the N115 billion Federal Government-United States Agency for International Development (USAID) deal to support the private sector and address some of the longstanding challenges.
The MAN boss further canvassed encouragement for sub-national governments that have keyed into the constitutional amendment that guarantees entry into the energy sector; ensure the connection of all consumers to the electricity grid through adequate metering to avoid free riding and unfair charges on the few connected consumers.
He also called for reduction in energy transmission and distribution losses by adopting modern technologies such as smart sensors and machine learning algorithms for rapidly predicting and detecting technical faults to enable quicker repairs.
Other recommendations include the prioritisation of the domestic supply of gas to make it more accessible for local manufacturers and enforce the pricing of domestic gas supply in Naira as it is only a fraction of gas export, refocusing the Gas Master Plan to ensure sufficient supply of gas for power generation.