The burden of local manufacturing may have increased in recent times as the operators spent N290 billion on self-generated energy in a space of three months – first quarter – exclusive data sourced from the Manufacturers Association of Nigeria have shown.• Supply drops to 8.5 hours daily despite upgrade to Band ‘A’• Output dips as costs of production, distribution skyrocket
According to the association, at the end of last year, its members across different sectors, numbering over 2000, spent a total of N221.28 billion on diesel and gas expenses alone. The huge budget for alternative energy comes amid a sharp rise in electricity tariff for Band ‘A’ from N68 per kilowatt hour to N206.8 per kWh, a decision the manufacturers have described as unacceptable. A source in MAN, regretted that all the manufacturers, especially those in the enterprise and industrial zones, have been forcefully moved to the premium brand even as supply to them has worsened.
The challenges, coupled with the poor economic environment, have hurt selected manufacturing indicators according to the association’s Q1 2024 survey. Compared to Q4 2023, production and distribution costs have risen to 20.7 per cent, just as capacity utilisation has dropped to -9.76 per cent from -3.81 per cent.
“We were buying diesel at around N1,500 per litre in Q1and now the new electricity tariff is competing with diesel costs. I have no idea how they arrived at N225 per kilowatt but it is beyond outrageous. The worst part is that all manufacturers here were forced onto Band A but instead of getting 20 hours of electricity supply daily, we are getting 20 steady hours of darkness on average. We , personally foot all the repair and infrastructure bills of Ikeja Disco, which we happen to be under.
“Several businesses here got something similar to what we got but the average is between N20 and N50 million. To put it in context, those getting the latter figure were paying between N5 and N10 million just a month earlier. It is beyond outrageous and we cannot pay these figures. He said if the electricity were constant, diesel costs would be eliminated but that has not been the case as they are not only paying more for darkness, but their diesel costs have also instead, increased because of poor electricity.
Yusuf said the high diesel costs also affected logistics as most of the trucks used to move raw materials and finished goods across the cities and country are diesel-powered.