The Manufacturers Association of Nigeria has stated that the cost of accessing alternative energy sources increased by 87% between 2021 and 2022, from N77.22 billion to N144.5 billion spent by its members.
The News Agency of Nigeria reported that this is because the association has protested against the anticipated hike in electricity rates that will take effect on July 1st and has called it ridiculous.
The Director-General of NAN, Segun Ajayi-Kadir, reportedly revealed this during an interview on Friday in Lagos, when he claimed that the high costs associated with generating electricity from alternate sources made the actual sector now uncompetitive.
According to Ajayi-Kadir, a 40% tariff hike at this time would result in, among other things, greater production costs, a reduced profit margin, the paralysis of manufacturing activity, and decreased income remittances to the government.
He also claimed that Nigeria’s lack of a reliable, efficient, and reasonably priced electrical supply had long been a problem for industries, forcing them to supplement with other forms of energy.
He claimed that the fact that the government itself owed N75 billion in unpaid electricity bills demonstrated just how expensive electricity had grown to be.
“We already have power making up between 28 and 40 percent of the cost structure of manufacturing industries,” the MAN DG stated.
“You can envision the effects on energy-intensive manufacturing sectors like heavy machinery, chemical production, and metal processing.
“A rise in electricity prices will diminish manufacturers’ profit margins and limit their ability to grow their businesses and add new employees.”
He added that Manufacturers will ultimately pass on the added cost to the buyers of their goods, driving up the price of goods on the market and complicating the country’s rising inflation rate.
In order to meet the revenue requirements of the players in the energy supply business, Ajayi-Kadir encouraged the Federal Government and Nigerian Energy Regulatory Commission to ensure enhanced electricity generation, transmission, and distribution.
He emphasized that in order to ensure that power bills reflect consumption, the government needs to make sure that at least 90% of consumers are metered.
As of Monday, June 19, 2023, sources indicated that there will be a 40% increase in electricity rates, and the Federal Government had intimated that the N50 billion monthly electricity subsidy would be eliminated due to the revenue shortage.
The proposed hike in electricity rates that is scheduled to take effect on July 1, 2023, has been halted immediately, according to a petition made yesterday by the Nigeria Labour Congress to the Federal Government.
The NLC opposed the idea vehemently but stated that the rise shows an obvious disrespect for the welfare of consumers, especially those who are in precarious economic positions.
