Brand owners under the umbrella of the Manufacturers Association of Nigeria (MAN) have outlined the dangers of increasing electricity tariffs in 2025 to the Federal Government. They added that the move will be inimical to the competitiveness of Nigerian products and businesses which will further worsen the effects of the high cost of production exacerbate inflationary pressure and lead to further closure of more private businesses.
Speaking on the proposed electricity tariff hike, the Director-General of MAN, Segun Ajayi-Kadir, noted that electricity is an important input in manufacturing processes with significant effects on production cost and prices of products.
He said the incessant increases in electricity tariffs were hindering the performance of the sector and growth of the economy.
“No nation can attain significant industrial development without energy security, which is timely access to sustainable and cost-effective energy, Ajayi-Kadir said, adding that sustainable and low-cost energy supply provides incentives for scale production and competitiveness of the industrial sector.
According to the DG, it is based on the critical importance of energy security in achieving Nigeria’s industrial aspiration that the power sector was privatised in 2013 to improve the scale of energy supply to the nation, particularly the industries.
He said, “Unfortunately, this privatisation has not yielded any result. 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 at around 10,000 megawatts and it has not been fully utilised due to the limited capacity of the Generation Companies (GenCos) and DisCos to generate and distribute adequate electricity supply nationwide.
“Despite the inability to meet consumer demand, we have witnessed consistent increases in tariff without a commensurate and good quality supply.”
According to the 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 per cent was implemented. Thus, indicating a 5.03 per cent decrease year-on-year and 2.72 per cent quarter-on-quarter.”
Ajayi-Kadir noted that MAN had advocated 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.
Persistent increase in tariff, he said, 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 battling with low purchasing power.”
He advised the government not to entertain any form of increase if they’re still interested in the survival of businesses and rather commission 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.