Stakeholders at the ongoing Nigerian Oil and Gas Energy Week in Abuja have recommended subsidies for manufacturers in the country.
They said that a subsidized manufacturing sector will drive down costs for operators and enable expansion which will benefit the countryās economy.Ā Ā
During discussions featuring George Onafowokan, the Managing Director of Coleman Cables and Wires, Adewale Fayemi, Country Advisor (Multi Energies) at TotalEnergies, Dr. Ama Ikuru, the Director of Capacity Building at the Nigerian Content Development and Monitoring Board (NCDMB) and other top professionals, stakeholders made a case for affordable energy.
They believe that energy security for manufacturers can be achieved when there is financial support for the manufacturing sector.Ā
Rising energy costs have been a challenge for many manufacturers in Nigeria. A lot of them rely on various energy sources, which cost millions of Naira. Recall that in the first quarter of 2023, Dangote Cement spent N56.7 billion on power and fuel in its Nigerian operations.Ā
Meanwhile, Proforce Limited, a manufacturer of armoured vehicles, told Nairametrics that the company spent up to N36 million monthly on power supply from the national grid and diesel generators as of September 2022.Ā
MAN has said the same thing in the pastĀ
During a June 26 interview on Arise TV, the President of the Manufacturers Association of Nigeria (MAN) Otunba Meshioye said that most countries support their manufacturing sector until the businesses get to maturity stages and can operate independently.
He urged the government to consider subsidies for the countryās manufacturing sector, especially in terms of electricity and even beyond that.Ā Ā
- āIf you want to encourage businesses and investments, any tax relief and any subsidy will be very ideal, so if the government gives a special rate for the manufacturing businesses, this will be very good, and it means that the cost of energy will become lower than it has been hitherto. Our costs will become more competitive, this will be very apt at this timeā.Ā Ā
He further stated that allowing the challenge to fester means that the Nigerian government and the citizens will suffer a loss because many manufacturers will close shop and people will relocate their investments to other countries.
However, if there is a special subsidy/percentage reduction, it will be better and will help manufacturers surviveĀ Ā Ā
According to Otunba Meshioye, manufacturers have already complained to the Nigeran Electricity Regulatory Commission (NERC) on a couple of things, which include the haphazard way of increasing electricity tariffs as well as the payment of gas supplies in dollars for those who want to have gas-based power plants.Ā Ā
He said:Ā
- āManufacturers have said they should be allowed to pay in Naira, because that is our local currency, and the resource is found in Nigeria.āĀ Ā
He pointed out that all these make it difficult to predict energy costs for manufacturers in the country. He stated that people should have easy access to the national grid and private investments should be encouraged in Nigeriaās electricity sector to grow competitiveness and efficiency.Ā Ā
He also said that metering is very important, and all Nigerian residences and businesses should be metered to put an end to indiscriminate billing.Ā Ā Ā
What you should know
The 2023 Electricity Act recently signed by President Bola Ahmed Tinubu will create an enabling environment for opportunities and competitiveness as states will have the power to develop their electricity market.Ā Ā
The Act also promotes embedded power generation, hybridized generation, co-generation and the generation of electricity from renewable sources such as solar energy, wind, small hydropower, biomass and other renewable sources.Ā
We should not start another round of subsidy that will affect our economy. We should do what is sustainable.
Corruption and bad government are curses on Nigeria. More advanced countries find ways to assist their key sectors to remain competitive through subsidy and various means Here greed, self interest and under hand dealings will not allow the country to prosper. Our institutions are weak and they play over lapping roles leading to multiplicity of fees and taxes. The issues are multifarious and mostly self inflicted