As persistent power outages continue to haunt industrial zones, causing production shortfalls and raising cost, Nigerian manufacturers are increasingly generating power on their own, with annual self-generating capacity in the industry put at 13,223 megawatts.
The figure emerged from a survey undertaken by Adeola Adenikinju, professor of economics at the University of Ibadan, which was funded by the European Union and the government of Germany.
The 2015 survey, which is the latest in the series, shows that the chemicals and pharmaceuticals sub-sector is the biggest self-generator of power (3,153MW) followed by the food, beverages and tobacco sub-sector (2,098MW) and the industrial plastics and rubber (2,051MW).
Manufacturers generate power through the use of generators, inverters, USPs and coal-fired plants, fuelled by gas, low-pour fuel oil (LPFO) and coal.
“The importance of power to manufacturers cannot be overemphasised. For you to do any production, you need to run your plant and those plants need energy, which takes about 40 percent of our production cost and that is not good for our business, especially when you have to compete with imported products.
“Therefore, everything we can, we must do to ensure we bring our costs down,” Reginald Odia, chairman of Economic Policy Committee of the Manufacturers Association of Nigeria (MAN) and CEO of Bennett Industries Limited, said in an interview with journalists.
Manufacturers spent N213.77 billion on alternative power sources between 2014 and 2016, spending N25 billion in 2014, N58.82 billion in 2015 and N129.95 billion in 2016, according to data from MAN.
Manufacturers have formed their power development company to negotiate with private energy suppliers for the provision of electricity at industrial clusters. This is because they are not getting enough power from power distribution companies called DisCos, as the power sector privatisation of 2013 appears to worsen electricity supply.
“Power takes up much of our expenditure and we are determined to get more of it to power industries. Thirty to to 40 percent of our expenditure goes to power,” Ibrahim Usman, chairman of MAN Power Development Company Limited, said.
Manufacturers have signed an agreement with Tower Energy Solution & Systems Limited, for the supply of six to 10 megawatts (MW) of electricity to Henry Carr Industrial Cluster in Ikeja, Lagos.
They have also agreed with Negris Group for the supply of up to 80 MW of electricity to Odogunyan in Ikorodu industrial cluster.
They are also talking with solar power supply firms in northern Nigeria, where there is limited gas supply to enable clusters in Kaduna, Kano and other parts, to have incremental power at cheaper rates. Similarly, a negotiation is in the pipeline with Sahara Energy, Geogrid LighTec Limited and other companies, for the supply of power to industrial clusters, according to Ibrahim Usman, chairman of MAN Power Development Company Limited.
“The idea is to be able to put manufacturers together in clusters and arrange for power which can be supplied through providers that will engage in power supply through hydro, solar, gas and will remove the cost of manufacturers getting involved in producing their own power, “ Odia said.
Manufacturers struggled to get gas in the third quarter of 2016 due to scarcity. They contended that the price of gas at $7 to $8 dollar per standard cubic feet was high, while gas suppliers are seeking a market –driven price.
The Economic Recovery and Growth Plan (ERGP) launched earlier in the year, plans to restore lost gas supply through the Gas Flare Commercialisation Programme and review the gas pricing structure to recover all prudent costs, as services to give willing developers access to under-developed gas resources.
“Power supply remains at the heart of doing business in Nigeria. Getting Electricity is one of the indicators for the ranking and we wish to reiterate our call on government to sustain the current reforms towards resolving the lingering issues in the power sector,” said Nike Akande, president of the Lagos Chamber of Commerce and Industry (LCCI) at a recent power sector dialogue in Lagos.
ODINAKA ANUDU
