Manufacturers’ energy spend fell by 35 percent in the first half (H1) of 2018 from what it was in the corresponding period of 2017, but this does not call for celebration yet.
According to the Manufacturers Association of Nigeria (MAN), expenditure on alternative energy source in the sector stood at N43. 19 billion in H1 of 2018, which is 34.6 percent lower than N66.03 billion recorded in the same half (H1) of 2017.
This also represents 15.9 percent from N51.35 billion reported in the preceding half.
MAN ascribes the decline in expenditure on alternative energy to low utilisation of energy in the period due to general sluggishness of economic activities and slight improvement in electricity supply from the national grid.
“Electricity supply, particularly from the distribution companies, remained core challenge of the manufacturing sector in the first half of 2018. Average hours of electricity supply in the period remained at nine hours per day since the second half of 2017. However, average number of power outage in the period dropped to three times dally, indicating slight improvement in electricity supply to the sector,” MAN survey says.
Forty percent of Nigerian manufacturers’ expenditure goes to energy. The slight improvement in energy supply may not be sustainable as the major challenges haunting Distribution Companies (DisCos) are not yet solved. Due to poor due diligence by DisCos during power privatisation in late 2013, they are failing to provide sufficient power for homes, offices and industries.
Manufacturers are increasingly abandoning DisCos and reaching agreements with private sector players that can provide them with adequate energy for operations. MAN, particularly, has founded the MAN Power Development Company and has entered into agreements with a number of firms, including Tower Energy Solution & Systems Limited, and Negris Group, among others, for the supply of power to various industrial clusters.
“South Africa, though with its problems, is still ahead of us in energy. To industrialise Nigeri, we need to get energy mix right,” said Ike Ibeabuchi, manufacturer and managing director of MD Services Limited.
Also, there are issues around gas pricing, which manufacturers are battling with. Local manufacturers say they buy gas in dollars rather than naira, which erodes the foreign exchange with which to procure raw materials.
As confirmed by Ibrahim Usman, chairman of MAN Power Development Company Limited, MAN is seeking renewable energy support in other parts of the country where there is no gas.
Renewable energy is becoming a reliable alternative energy solution for manufacturers across the world.
In September 2017, a report by David Gardiner and Associates, a strategic advisor to organisations seeking a sustainable future, reviewed 160 of the largest global manufacturing firms in the United States. According to the report, entitled, ‘The Growing Demand for Renewable Energy Among Major US and Global Manufacturers’, 25 percent of manufacturers, including General Motors, Anheuser-Busch InBev, and Mars, have renewable energy targets while 83 percent have greenhouse gas reduction goals.
The report says that renewable energy, particularly wind and solar, is now among the cheapest and cleanest generation resources, stating that manufacturers are pursuing that type of energy to help reduce costs.
As reported by Alyssa Danigelis of energymanagertoday.com, of the 160 companies surveyed, 18 have 100 percent renewable energy targets.
Even though some may dismiss this as an American example, the fact remains that this is happening across the world and manufacturing concerns world over are working towards being energy efficient.
One key reason why China is competing with the rest of the world is its renewable energy potency. Apple announced late last month that three more of its suppliers— Sunwoda, Compal and Biel— in China would use 100 percent renewable energy in manufacturing its products by the end of 2018.
ODINAKA ANUDU
