Improved electricity: Industrial clusters energy spend drops 22%

Power supply to industrial clusters improved slightly year-on-year in the second half of 2017, from eight to nine hours on the average, leading to 22 percent decrease in manufacturers’ energy expenditure.

According to the latest data obtained from the Manufacturers Association of Nigeria (MAN), analysed by BusinessDay, manufacturers spent N51.35 billion in the last six months of 2017 as against N66.03 billion expended in the second half of 2016, indicating a 22.23 percent drop.

This is a testament that improved power supply across the country will have a multiplier effect on the economy, analysts say.

The data show that manufacturers spent N66.96 billion  in the first half of 2017, indicating a 23 percent drop when compared with the amount spent on the second half.

Power outages occurred four times each day on the average in the second half of 2017, the data say.

“The decline in expenditure on alternative energy source can be attributed to the relative improvement in electricity supply to manufacturing companies from the national grid,” MAN says.

About 30 to 40 percent of manufacturers’ expenditure goes to alternative energy sources such as diesel, fuel, gas, low-pour fuel oil, USPs, coal-fired plants and inverters, among others.

Manufacturers spent N129.95 billion on alternative energy sources in 2016 as against N58.82 billion recorded in 2015.

Nigerian manufacturers are increasingly generating power on their own, with annual self-generating capacity in the industry put at 13,223 megawatts (MW).

According to 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 in 2015, the chemicals and pharmaceuticals sub-sector is the biggest self-generator of power in the  sector with capacity reaching 3,153MW. The sub-sector is followed by the food, beverages and tobacco sub-sector (2,098MW) and the industrial plastics and rubber (2,051MW).

Already, the Manufacturers Association of Nigeria, through its recently formed MAN Power DevelopmentCompany, has 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.

MAN has an agreement with Negris Group for the supply of up to 80 MW of electricity to Odogunyan in Ikorodu industrial cluster.

The organisation is also talking with solar power supply firms in the northern Nigeria, where there is limited gas supply, to enable clusters in Kaduna, Kano and other parts of the north to have incremental power at cheaper rates. Similarly, a negotiation is on 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 PowerDevelopment 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, “ said Reginald Odia, chairman of Economic Policy Committee of MAN and director of the MAN PowerDevelopment Company.