New manufacturers’ electricity company to power Ikeja, Amuwo-Odofin clusters

Owing to the epileptic power supply across industrial clusters, Nigerian manufacturers have floated an electricity company called Manufacturers Power Development Company Limited.

Consequently, the Manufacturers Association of Nigeria (MAN), which floated the electricity company, has selected Henry Carr in Ikeja and the Amuwo Odofin industrial clusters, both in Lagos State, as pilot locations.

At a stakeholders meeting organised by the Manufacturers Power Development Company Limited, Ibrahim Usman, chairman of the company’s board, said 13,000 mega watts (MW) of electricity is presently self-generated by manufacturers across the country.

Usman said between 30 and 40 percent of manufacturers’ resources go into power generation,  making it difficult for them to be competitive.

“Competitiveness will continue to go down if we manufacturers do not self generate more electricity,” said Usman.

Most Nigeria’s industrial clusters lack power, water and other infrastructure needed for smooth production. According to data by MAN, power outages occurred six times daily at industrial zones in the first six months of 2015.

According to Usman, industrial clusters all over the world are usually provided with facilities which will make their operations more efficient and less costly, stressing that unless manufacturers in Nigeria pay less for power, their cost of operations will continually make it difficult for them to be price competitive.

Usman further said SMEs are the worse hit, pointing out that concerted efforts are needed to get support from IPPs, and finance institutions like the International Finance Corporation (IFC).

The IFC of the World Bank Group made a presentation on how they could support MAN in providing counterpart funds for IPPs who are eventually selected for power generation in the two clusters being targeted at the moment. Emphasis was placed on credibility of the off- takers in guaranteeing that debts are be paid conformably.

“We need to create credit in this sector. For MAN members, I noticed that a lot of the time, they sign on blue-chip clients who have the levity to put up these letters of guarantee with banks to support their financing. But, what of the smaller companies, the SMEs who do not have the ability to procure these letters of credit that they require for necessary credit enhancement?,” Heidi Ijomah, investment officer, Africa Infrastructure at IFC asked rhetorically.

“By investing, we are looking to see whether we can put a facility together for the DISCOs to be able to target specifically, and carpet for loss reduction. By ensuring loss reduction, the overall pricing of electricity to the end user (manufacturers) can also be reduced, through this, also making the DISCOs more viable, said Ijomah.

Caleb Ojewale