Nigeria loses 40% of electricity during distribution

as FG assures manufacturers that FX measures are short-term

Nigeria’s electricity problem may be partly attributed to 40 percent loss that occurs during distribution.

Vice President Yemi Osinbajo disclosed this during this year’s annual general meeting of the Manufacturers Association of Nigeria (MAN) held in Lagos on Wednesday.

According to Osinbajo, this is a big challenge to the power sector, as the losses suffered during this stage constitute a huge cost to distribution companies and the government.

He said the only way Nigeria, including manufacturers, could compensate the value chain in the power sector, which includes the generation, the transmission and the distribution companies, was have a cost-effective tariff system.

“The cost of power is reflected on what is borne at every stage. We must understand that tariffs cannot remain the way they are,” he said, while addressing the power challenge faced by manufacturers in Africa’s largest economy.

He said The Federal Government expected transmission capacity to improve by 40 percent next year.

The Central Bank of Nigeria (CBN) recently banned importers of 41 items, some of which are manufacturers’ raw materials, from accessing foreign currencies from Nigerian markets.

The vice president said some of the current issues in the foreign exchange market were short-term, adding that the government would think of how to ease the challenges in the medium- to long-term.

“A good manufacturing sector places us in a better position in trade negotiations. Diversification of the economy is central to our plan, which entails the agriculture value chain. But you cannot talk of the value chain without manufacturing, which is the missing link,” he said.

Thabo Mbeki, former South African president, who was the guest speaker, said “the manufacturing sector remains a pillar in fighting poverty, underdevelopment and unemployment.”

He regretted that many years after independence, African countries still sustain economic relations developed during the period of colonialism, making it producers and exporters of raw materials and importers of manufactured products.

Mbeki suggested that Nigeria and other parts of Africa adopt or sustain national industrial plans, adding that the governments and representatives of the private sector should engage one another to elaborate such plans.

While saying ‘no’ to the proposed Economic Partnership Agreement (EPA) proposed by the European Union, Mbeki said the industrialisation Nigeria and Africa are determined to achieve requires that they have access to electricity, transport routes, modern communication technology and skills to give them the required competitive edge and necessary infrastructure to achieve these outcomes.

“I would like to say that, by definition, young and developing corporations have great need to access affordable credit to be able to finance their operations. Clearly where the normal financial institutions are unable to respond to this need, government would have to intervene to address this requirement, hence my mention earlier of public sector industrial banks,” he said.