Manufacturers Spend 40% Of Production Overhead On Electricity Cost, Demand Uniformity In Tariff

Discriminatory electricity tariff imposed, across different states in Nigeria, by the Electricity Distribution Companies (DISCOS) and the widening gap of product prices in the country, are causes of great concern to The Manufacturers Association of Nigeria (MAN).

Consequently, MAN is calling on the Federal Government to weigh in on the situation and make the DISCOS apply uniform tariff to facilitate manufacturing activities across the country. In a statement, the president of MAN, Mansur Ahmed, said disparity in electricity tariff has been observed to favour some regions of the country over others.

“Most worrisome is the fact that manufacturers who are made to pay higher tariffs, which in some instances the difference are as high as 25%, making it impossible to ensure fair competition amongst manufacturers who sell their products in the same market and cannot afford effects of wider gap in the prices of products.” He noted.


According to the statement, “The resultant effect of this tariff differential is that manufacturers under the DISCOS with higher tariff rate sell at a loss in order to sustain the market share and if action is not taken urgently, the affected manufacturers may be forced to close down with looming adverse effect on employment and the economy.”

The manufacturers are demanding uniformity in tariff or Government intervention with the establishment of an equalization fund as provided in the petroleum sector to support the DISCOS in a situation where the disparity has to be maintained due to the low commercial activities.

“The inadequacy of electricity supply has been one of the major challenges hindering the competitiveness of manufacturing sector in the country as manufacturers spent over 40% of the production overhead on electricity leading to increase in cost of operation and prices of made in Nigeria goods when compared with prices of similar products from other countries.” The statement read.

Ahmed commended the Federal Government for policies aimed at sustaining economic growth and the development of the manufacturing sector in Nigeria particularly the on-going efforts at improving the quality of reliable and sustainable electricity supply in the country.

“It is therefore worthy to note that improvement in electricity supply in terms of quantity, quality, efficiency in service delivery and pricing is critical to the competitiveness, growth and development of the sector, this we believe is a recipe for sustaining the employment of over 65 million direct and indirect workers in the manufacturing sector.” He said.


Comment here