The Manufacturers Association of Nigeria, (MAN), has warned that the planned hike in the electricity tariff will erode the profit margin of operators in the real sector and reduce their ability to expand operations and create new jobs.
MAN noted that manufacturers will ultimately pass on the additional cost to the consumers of their products, leading to increase the cost of the products in the market and complicate the rising inflation rate in the country.
Director-General, MAN, Segun Ajayi-Kadir, said this in reaction to recent announcement to increase electricity tariff from July 1.
According to the Nigerian Electricity Regulatory Commission (NERC), the increase was in response to the rise of the pump price of premium motor spirit (PMS) the rise in inflation rate which was at 22.41 per cent, and a shift in the exchange rate from N441 to N750.
But the MAN Chairman, who spoke in an interview with newsmen, described the planned increase as outrageous.
According to him, a 40 percent tariff increase at this time would engender higher costs of production, lower profit margin, manufacturing activities paralysis, lower revenue remittances to government among others.
He stated that the absence of stable, effective and fairly priced electricity supply in Nigeria had been a long-standing challenge for manufacturers which compelled them to supplement with alternative energy sources.
Regrettably, he noted that the available alternative energy sources such as diesel had become exorbitantly expensive.
The MAN Director-General said that manufacturers spent at least N144.5 billion on sourcing alternative energy in 2022, up from N77.22 billion in 2021, translating to 87 percent increase in the cost of access to alternative energy sources.
He said the fact that government itself was owing N75 billion in unpaid electricity bills was indicative of how burdensome the cost of electricity had become.
According to him, A spike in the electricity tariff will erode the profit margin of the manufacturers and reduce their ability to expand operations and create new jobs.
Ajayi-Kadir advised the Federal Government and Nigerian Electricity Regulatory Commission (NERC) to instead, ensure improved electricity generation, transmission and distribution to meet the revenue needs of the electricity supply industry stakeholders.
