The Manufacturers Association of the Nigeria (MAN) has warned that the proposed electricity tariff hike will lead to increase in cost of production, and eventual  increase in the prices of goods and commodities.

 

The association, made this known in a recent statement signed by its Director General, Segun Ajayi-Kadir.

 

Expressing its reservation against the proposed tariff hike, the  association described  as burdensome, the present tariff being paid by Nigerians for power,  warning that further increase from July 1, this year, might worsen the already bad economic situation in Nigeria, and  reduce activities in the manufacturing sector, drastically.

 

The Association stated that energy already constitutes between 28-40%  cost structure of  the industry, noting that a further increase would negatively impact the fortune of the sector.

 

MAN expressed concerns that sourcing for electricity for operations is already taking its toll  on the nation’s manufacturers, with their total spend on alternative energy, in 2022, at N144.5bn, from N77.22b in 2021.

 

“It is therefore highly concerning for manufacturers to witness the electricity tariff skyrocketing beyond the present embattling high prices, starting July 1. A 40% hike at this time is simply outrageous.

 

 

“Proposed electricity will increase production costs. Higher electricity tariff will directly increase the cost of production for manufacturers. Already, we have energy constituting between 28-40% in the cost structure of manufacturing industries. You can imagine the impact on manufacturing industries that are energy-intensive such as metal processing, heavy machinery, and chemicals manufacturing,” the association stated.

 

MAN also believes a hike, as being proposed, will reduce profit margins of manufacturers, and reduce their ability to expand operations and create new jobs

 

The association added that further electricity hike might  decrease the revenue collectable by government; since  manufacturers’ profitability, must have been negatively impacted by such hike.

 

It also expressed concern about an impending increase in the cost of indigenous products in the market, and the rising inflation likely to follow, if the hike is implemented.

 

MAN, therefore, urged the federal government and NERC to ensure improvement in electricity generation, transmission and distribution that will lead to adequate and reliable electricity supply in the country, rather than increase tariff on mere 4000MW.

 

 

The manufacturers’ group also called on the government to ensure that at least 90% of electricity consumers are metered to ensure consumption reflective electricity bill payment.

 

“Government should also 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,” it added.

 

It also called on states and private investors to rise up to the challenge by taking advantage of the Electricity Act 2023 to eradicate the energy poverty of their people.