The Manufacturers Association of Nigeria (MAN) has cautioned the federal government against any fresh increase in electricity tariffs, warning that such a move would harm the competitiveness of Nigerian products and businesses.
Segun Ajayi-Kadir, Director General of MAN, issued this warning on Thursday while highlighting the adverse impact of persistent tariff hikes on the manufacturing sector and the broader economy.
Ajayi-Kadir noted that the 2013 privatisation of the power sector had not delivered the intended improvements. He lamented that inefficiencies in the electricity value chain continue to burden consumers, including manufacturers, who cannot pass on the increased costs to already struggling consumers.
“The proposed increase in electricity tariff is inimical to the competitiveness of Nigerian products and businesses. It will exacerbate high production costs, worsen inflation, reduce disposable income, increase unsold inventories for manufacturers, erode profit margins, and lead to further job losses and business closures,” Ajayi-Kadir stated.
He emphasized that manufacturers are already disadvantaged as they cannot transfer these rising costs to consumers grappling with low purchasing power.
Ajayi-Kadir urged the government to reassess the power sector’s performance before considering any tariff hike.
He advised: “The government should commission a review of the DisCos’ performance, assess the impact of previous tariff increases on manufacturers, businesses, and households, critically examine the cost-reflective tariff model, and audit the DisCos’ investment in distribution infrastructure.”
Reflecting on the privatisation of the power sector, Ajayi-Kadir said:
“Electricity is a critical input in manufacturing processes, significantly affecting production costs and product prices. The 2013 power sector privatisation aimed to enhance energy supply, particularly for industries, but it has not delivered the expected results.
“It is widely believed that operators in the value chain lack the technical and financial capacity to deliver optimally.”
Ajayi-Kadir emphasized the importance of energy security for industrial development, urging the government to prioritize sustainable and cost-effective energy solutions to bolster industrial growth and economic development.
VANGUARD
