The Manufacturers Association of Nigeria (MAN) has said that Nigeria’s economy loses as much as N10.1 trillion annually to epileptic power supply.
MAN is the umbrella body of all manufacturers in Nigeria.
According to the body, the amount is 2 percent of Nigeria’s Gross Domestic Product (GDP).
“Consequently, access to electricity has remained a hurdle for millions of Nigerians. According to the 2021 report by the International Energy Agency, Nigeria’s 86 million is the largest number of people in the world without access to electricity”, Director-General (DG) of the Association, Segun Ajayi-Kadir said.
He noted that the current power supply across the country is totally apparently inadequate to satisfy the energy requirements of the manufacturing sector and the entire population.
“As the largest energy access deficit in the world, Nigeria’s shortage of electricity supply has been identified as a hindrance to the profitability of manufacturers with an annual economic loss valued at about N10.1 trillion or two per cent share of the country’s GDP,” he said.
The MAN DG, therefore backs the ongoing electricity industry reforms of the present administration saying a stable power sector will guarantee sustainable economic growth and development.
The manufacturers lamented the unfavourable situation in the power sector has placed Nigeria among the worst countries to do business with a rank of 171 out of 190.
Ajayi-Kadir, while assessing the possible impact of the Electricity Act 2023 signed by President Bola Tinubu, said the Act, if well implemented, promises to be a major game-changer for the manufacturing sector as it would address the numerous constraints within the sector.
Ajayi-Kadir, stated that the Electricity Act 2023 has favourable implications for the manufacturing sector as it will help reduce cost of alternative energy, competitive and lower electricity tariff, improvement in inflow of Foreign Direct Investment (FDI) and manufacturing performance.
He noted further that it will help increase Internally Generated Revenue (IGR), improved infrastructure and less tax burden on manufacturers, more investment in renewables, backward integration and energy security, and stable power supply and proper planning.
Ajayi-Kadir recalled that over the past decades, the Nigerian power sector has encountered much turbulence in its electricity value chain due to poor policy enforcement, over-regulation, instability of gas supply and bottlenecks in its transmission network.
“These problems have culminated into erratic electricity supply, frequent power outages and persistent collapses of the national grid. For many years, the situation has stunted the growth of the economy.
Ajayi-Kadir, however, stated that notwithstanding, the Electricity Act 2023, if well implemented promises to be a major game changer for the manufacturing sector through some favourable implications.
He said for instance, that it will reduce cost of alternative energy, pointed out, for instance, that last year, total amount spent by members of MAN on alternative energy surged from N77.21 billion in 2021 to N144.47 billion.
‘If fully implemented to the letter, the new Electricity Act will see to the drastic fall in the cost of alternative energy incurred by our members and we expect this to boost our profit margin,’ Ajayi-Kadir said.
While also noting that the new Act will usher in a regime of competition and lower electricity tariffs, the DG, said as an advocacy Association, MAN has always pushed for the need to charge cost-reflective electricity tariffs to avoid extortion of its members.
“Fortunately, it is of great delight that this new Act fits like a glove as it will help actualize a cost-reflective tariff considering the healthy price competition it will bring between the states and private investors,” he stated.
