Manufacturers float electricity company as power supply drops in industrial clusters

As industrial clusters continue to experience drop in electricity supply, Nigerian manufacturers have set up a power development company that will help reduce the negative impact of the situation on production.

The firm is known as MAN Power Development Company Limited and is being managed by the Manufacturers Association of Nigeria (MAN).

“The company will help look into the challenges relating to power facing our members,” said Usman Ibrahim, chairman, MAN Infrastructure Committee and vice president of MAN in the north-east zone, at the MAN Expo held last week in Lagos.

“Most of us spend between 30 and 40 percent on power. This is very sad because there can be no manufacturing and development without power,” said Ibrahim, during a panel session.

Poor electricity supply remains one big challenge facing manufacturers in the country, as they resort to the use of generators to power their businesses. The big multinationals have expensive gas and coal-fired plants, while the majority of medium, small and micro players use diesel and fuel to power generators.

This challenge stems from perennial challenges confronting private electricity companies such as lack of investment capital, low gas pricing, transmission brouhaha, consumer evasion of bills, and pipeline vandalism, among others.

Electricity supply peaked at 4,387 mega watts (MW) early March, but dropped to 1580MW in the second week of the month, owing to pipeline vandalism and protests by the staff of the Nigerian National Petroleum Corporation (NNPC) over unbundling of the agency.

Data from MAN shows that there were, on the average, five power outages each day in industries zones across the country in the first half of 2015.

According to Ibrahim, government must make gas pricing reasonable to support generating and distribution companies.

“A lot of distribution companies did not do due diligence before buying the assets and they inherited a lot of problems. But manufacturers and consumers cannot pay for this loss,” he added.

Reginald Odia, chairman, Technical Committee on Operationalisation of Micro-Grid Industrial Cluster Initiative, said Nigerian manufacturers spend 40 percent of their expenditure on power, whereas only ten percent is spent on this in other countries, disclosing that manufacturers now have a mini grid system.

“We have already presented that to the Federal Government and once it goes through, we should be able to have a grid system that will promote power for manufacturing,” Odia said.

“This will likely cost higher. In Ikeja disco, you can get it at N33 per unit, but this will cost N40 or N45 at a maximum, but this will give us reliable power,” he disclosed.

Frank Jacobs, president, MAN, said many micro-, small- and medium- scale manufacturers have gone out of business owing to inadequate power, adding that surviving ones are generating their own power.

ODINAKA ANUDU