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Power supply improves in industrial clusters as energy spend falls 24%

Nigeria’s manufacturers heaved a sigh of relief in the first six months of 2019 as power supply improved in industrial clusters, forcing energy spend in the manufacturing sector to fall by 24.3 percent.

Expenditure on alternative energy in the first half (H1) of 2019 declined to N32.68 billion, from N43.18 billion reported in the corresponding period of 2018, representing a 24.3 percent drop, a new report by the Manufacturers Association of Nigeria (MAN) said.

Manufacturers spent N49.92 billion on alternative energy in the second half of 2018, according to the report, which covered members of MAN, who are above 2,000.

“Electricity supply, particularly from the distribution companies (DisCos), though a core challenge of the manufacturing sector, has been improving albeit marginally since the second half of 2018,” MAN admitted in the report.

The association said average hours of electricity supply in the H1 of 2019 was 10 hours per day, while the average number of power outages in within the period was five times daily. The number of outages, however, represented an increase of one from four times daily recorded in the second half of 2018.

The report signifies a positive step towards reducing production cost, which is one factor that makes Nigerian manufacturers un-competitive in both local and global markets. There is, however, no guarantee that the situation will remain the same or improve in the H1 of 2020.

Industrial clusters in the country include Ikeja (Lagos), (Apapa (Apapa), Amuwo-Odofin (Lagos), Aba (Abia), Ogbaru (Anambra), Agbara (Ogun), and Sharada (Kano), among many others.

Energy spend constitutes 30 to 40 percent of manufacturers’ expenditure.  Nigeria generates up to 7,000 mega watts (MW) of electricity but distributes 3,000MW to 4,000MW, which is grossly inadequate for a population of 200 million people, which is made up many households, industries, government and businesses.

Nigerian manufacturers self-generate 13,223.67 mega watts (MW) of electricity, according to  a survey carried out by the Nigerian Energy Support Programme and Deutsche Zusammenarbeit (GZ) in 2016.

“It is great news that manufacturers alone have the capacity to produce such enormous mega watts of electricity,” said Adeola Adenikinju, then professor at University of Ibadan but now member of the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC), who was part of the preparation of the survey funded by the European Union and the German government, in Lagos.

A break-down of the report entitled ‘Survey of Power Demand and Energy Consumption in the Industrial Sector in Nigeria’ showed that the basic metal, iron/steel and fabricated metal product sub-sector had a self-generation capacity of 1,443 MW but produced 1,023.42 MW.

The chemical and pharmaceutical sub-sector had the largest self-generation capacity with 3,153.28 MW.

Similarly, manufacturers in the domestic and industrial plastics/rubber and foam possessed the self-generation capacity of 2,051.10 MW, but actually produced 1,491.42 MW.

In the electrical/electronics industry, self-generation capacity was 818.10MW.

The food, beverages and tobacco sub-sector had the self-generation capacity of 2,098.11MW. However, they actually produced 1,347.24MW.

Also, the motor vehicle and miscellaneous assembly industry generated 853.74MW of power but self-produced 581.40MW.       The non-metallic products sub-sector had the self-generation capacity of 716.86 MW of power, producing 389.82MW.

A manufacturer said power was improving in some industrial clusters but was not sure how sustainable this would be.

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