Manufacturers spend N59bn on gas, diesel, inverters in 12 months

Poor power supply to industrial zones in 2015 forced Nigerian manufacturers to spend N59 billion on alternative power sources such as gas, diesel, and fuel, latest data from the Manufacturers Association of Nigeria (MAN) show.

This represents 135.28 percent spike from N25 billion spent by manufacturers on alternative power sources in 2014.

The N59 billion expenditure on alternative energy made in 2015 also incorporates money spent on power generating parts, electricity purifying and storage systems such as uninterrupted power source (UPS) and inverters, Real Sector Watch gathered.

The data further show that manufacturers’ expenditure on alternative energy sources was N29.48 billion in the second half of 2015 (H2 2015) as against N13.52 billion in the corresponding period of 2014.

The amount spent by manufacturers in H2 2015 was N0.14 billion higher than N29.34 billion recorded in the first half of 2015 ( H1 2015).

According to MAN, manufacturers in different industrial zones had an average of seven hours power supply per day from distribution companies (DISCOs) in H2 2015 as against nine hours in the corresponding period of 2014 (H2 2014). Similarly, power outages happened six times each day in H2 2015 in contrast to five in H1 2015.

“This was as a result of poor performance of the public electricity supply by distribution companies (DISCOs),” said MAN.

“Apart from the costs incurred on self-energy generation, manufacturers also expended huge sums procuring energy purifiers and boosters such as USP and inverters to boost the poor quality of electricity supply by the distribution companies,” MAN added.

MAN added that the increasing expenditure on alternative energy sources and escalation in the Nigerian Electricity Regulatory Commission (NERC) tariff order were responsible for high prices of locally made products, making them uncompetitive price-wise in comparison with imported goods.

Thirty to forty percent of manufacturers’ expenditure goes to alternative power sources. Large-scale manufacturers use mainly gas because it is cheaper, while medium-scale players operate majorly on diesel. Small-scale players use more of fuel to power their operations, Real Sector Watch findings show.

Manufacturers are currently struggling to get gas to power their operations.  One square metre of gas is $5 higher in Nigeria than it is in the global market, while its suppliers dollarise payment, which manufacturers say is illegal and harsh in view of foreign exchange scarcity in the economy.

“Gas is expensive in Nigeria. We need to look at what we can do to bring down the energy cost. We also need to review our energy policy,” Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), said at the LCCI complex in Ikeja, Lagos.

“Diesel price is also high, now above N200 per litre,” Yusuf added.

Micheal Ola Adebayo, chairman of Gas Users Group of MAN, said for the past one year now, manufacturers had been confronted with a number of increases in the price of natural gas due to the unstable rate of exchange of dollars to the naira.

Adebayo said the price of gas in the country ($7.65 per scm) was higher than the global price ($2. 5 per scm).

“This discourages investments,” said Jide Mike, former director-general of MAN, at a recent press conference in Lagos.

 

ODINAKA ANUDU

You might also like