Image: PHCN workers at work

Segun Ajayi-Kadir,  the Director-General General of the Manufacturers Association of Nigeria (MAN), has asserted that the incessant increases in 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.

In a public statement on Thursday,  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 furthermore noted: ” 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. Unfortunately, this particular privatization has not yielded the desired results.

It is widely believed that this is because the operators in the 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 supply nationwide.

Despite the inability to meet consumer demand, we have witnessed consistent increases in tariffs without a commensurate and good-quality supply.

According to NBS, 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.

MAN has severally advocated for 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.

The proposed increase in electricity tariff is inimical to the competitiveness of Nigerian products and businesses as it will further increase the cost of production, worsen the current inflationary pressure, aggravate the pressure on the disposable income of the average Nigerian, increase the unsold inventory of manufacturers, erode their profit margin, increase unearthed ployment rate and lead to close ure 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.

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.”