The Manufacturers Association of Nigeria (MAN) says high cost of energy supply is the major cause of poor competitiveness of made-in-Nigeria products.
According to MAN, while total expenditure on power in many emerging economies is nine percent, local manufacturers in Nigeria spend 30 to 40 percent on energy.
“It is no more news that manufacturers in Nigeria currently self-generate as much as 13,000MW through alternative sources of energy in order to stay afloat. In fact, members of MAN expended over N129billion on alternative energy generation in 2016 and the cost of alternative electricity generation alone constitutes about 40 percent of production cost. With such high costs, made-in-Nigeria products will hardly be competitive,” Frank Jacobs, president of MAN, said at a special interactive forum on Eligible Customer Regulation of the Nigeria Electricity Regulatory Commission (NERC) held on June 28, 2018.
Ibrahim Usman, vice president, North West zone, MAN, said made-in-Nigeria products cannot be competitive internationally, owing to high cost of generating power, stating that this is a key issue.
Eligible Customer Regulation was initiated to address high cost of electricity, according to Babatunde Fashola, minister of power, works and housing.
The declaration of Eligible Customer Regulations means successor electricity Generation Companies (Gencos) and Independent Power Producers (IPPs) would be able to by-pass the Bulk Trader (the Nigerian Bulk Electricity Trading Plc (NBET)) and sell electricity directly to eligible customers.
In other words, electricity customers who fall within any of the four ‘eligibility’ categories would now be permitted to buy power directly from Generation Licensees and Trading Licensees (also known as Suppliers).
“The dialogue session is important to us as manufacturers. Do not forget this is a brand new initiative by the government, so we need to inform our members so they will take advantage opportunities given because there is 2000MW to be taken,” Usman said.
A participant at the special interactive forum said while the regulation allows the eligible customers to contract directly with the Gencos, a possible issue that may arise is the ability of the eligible customers to commit to long-term PPAs (which is often required by Suppliers) and provide the requisite payment security to the Suppliers.
While applauding the government on the initiative, Usman, who is also the chairman of MAN Power Development Company (MPDC), said manufacturing is the biggest employer of labour after government, stating that Nigerian authorities must make electricity available at a cheaper rate to cut product costs.
On the pricing of the formula of the Eligible Customers Regulations, Usman pointed out that the Nigerian Electricity Regulatory Commission (NERC) has a template for pricing.
On how far the initiative has been welcomed by members of MAN, Usman said he believes there have been few licenses issued and some of the members are already enjoying them.
“In the regulation, there is a part of it that says if there is outstanding debt by any manufacturer, such will not enjoy Eligible Customer status. That is a problem for us because we are still in court with the Discos in respect of tariffs and what we want government to do is to come in and create a way to come in the middle between us and the Disco and help MAN intervene with regard to the debt,” he further stated.
