The Manufacturers Association of Nigeria (MAN) has raised serious concerns about the potential consequences of the proposed electricity tariff hike by power distribution companies in Nigeria. MAN's President, Francis Meshioye, expressed these concerns during a press conference where he addressed journalists.
Meshioye emphasized that the already challenging operating environment, compounded by power crises, had already led to the departure of several international manufacturing firms from the country.
He urged the government to reconsider the implementation of the tariff hike to prevent further multinational companies from relocating their operations elsewhere.
Earlier, some electricity distribution companies (DisCos) had issued public notices announcing their intention to increase electricity tariffs by approximately 30 to 40 percent for specific consumer categories, effective from July 1, 2023.
However, the DisCos later rescinded their initial announcement, citing the lack of approval from the Nigerian Electricity Regulatory Commission (NERC) for the proposed tariff hike.
Meshioye stressed that energy costs significantly impact the manufacturing
sector, representing a substantial portion of production expenses. He pointed
out that the downsizing of businesses in Nigeria reflected the challenges faced
by manufacturers, including the burden of high energy costs. These
circumstances have already motivated certain international businessmen to
relocate their manufacturing operations to countries with more favorable
business environments.
Reducing energy costs would yield benefits not only for manufacturers but also
for the general population. The high cost of energy serves as a major driver of
expenses, and addressing this issue would alleviate financial burdens for
manufacturers and potentially stimulate economic growth.
Failure to address the escalating energy costs may result in more manufacturers seeking alternative regions with more affordable energy prices for relocating their businesses.
Meshioye also highlighted additional factors that contribute to the decision of manufacturers to exit Nigeria, including the unpredictability of foreign exchange rates and the challenges associated with accessing foreign currency.
MAN's call for the government to reconsider the proposed electricity tariff
hike underscores the need to create a conducive business environment that
supports the growth and sustainability of the manufacturing sector in Nigeria.