MAN frowns at 40% hike in electricity tariff 

COMFORT EKELEME

Following the announcement of an upward review to the electricity tariff, the Manufacturers Association of Nigeria (MAN) has express concern for manufacturers, saying that an urgent need for the diversification of energy sources and intensifying infrastructure investment in the power sector.

MAN said it is highly concerning for manufacturers to witness the electricity tariff skyrocketing beyond the present embattling high prices, starting July 1, stressing that a 40per cent hike at this time is simply outrageous.

This is even as Electricity Distribution Companies, DisCos, have informed customers that electricity tariff would increase from July 1, 2023 following an increase in the exchange rate of the Naira to the dollar.

Director General, Segun Ajayi-Kadir, in a statement said 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 said, the government should ensure that at least 90per cent of electricity consumers are metered to ensure consumption reflective electricity bill payment, 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.

Speaking specifically, Ajayi-Kadir maintained that the federal government should eradicate outrageous bills by closing the metering gap through the liberalization of ultimate users’ access to effective mass metering.

According to him, there is the need for the government to ensure the connection of all consumers to the electricity grid to avoid free riding and unfair charges on the few connected consumers.

He also said that the authorities should work on efforts to increase the electricity supply base in order to distribute the total cost among a high number of consumers at a much lower unit cost.

“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.

 “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.

“Care should be taken to avoid introducing burdensome measures that will further strangulate the manufacturing sector and the whole economy,” he said.

Interestingly, the absence of stable, effective and fairly priced electricity supply in Nigeria has been a long-standing challenge for manufacturers.

The worrisome development has compelled many manufacturing industries to supplement the unreliable electricity supply with alternative energy sources. Regrettably, the available alternative energy sources such as diesel have become exorbitantly expensive.

On average, surveyed data by MAN suggests that manufacturers spent at least N144.5billion on sourcing alternative energy in 2022, up from N77.22billion in 2021.

This translates to about 87per cent increase in the cost of access to alternative energy sources by manufacturers within a year. In the last 8years, electricity tariff has been increased by 186per cent.

MAN however, noted that the fact that government itself is owing N75billion in unpaid electricity bill is indicative of how burdensome the cost of electricity has become.

The Association further noted that, a further rise in electricity tariff could lead to increase in cost of production for manufacturers, reduction in profit margins, high probability of activities paralysis and potential decrease in the revenue collectable by government.

Also, manufacturers will ultimately pass on the additional cost to the consumers of their products, recession of manufacturing activities.