MAN, power ministry tackle high electricity costs, erratic supply

The Manufacturers Association of Nigeria has said it is working with the Federal Ministry of Power to address high electricity tariffs, unreliable grid supply and rising energy costs that are undermining industrial production and competitiveness in the country.

 The association said the collaboration would focus on developing sustainable energy solutions for manufacturers, including renewable energy, battery storage, captive power generation and improved electricity distribution.

 The Minister of Power, Joseph Tegbe, who spoke at the second edition of the Manufacturers Energy Security and Energy Efficiency Summit in Lagos, also warned industrial customers against unauthorised electricity connections. He disclosed that investigations had uncovered about 14 industrial customers along a particular corridor who owed more than N400m in unpaid electricity charges over several years.

 He said such practices deprived the electricity sector of revenue needed to sustain power supply and unfairly burdened consumers who paid their bills.

 “Such conduct deprives the sector of revenue that we need to sustain the supply, and unfairly burdens consumers who pay honestly,” Tegbe said.

 The minister vowed to recover the outstanding charges and hold those responsible accountable, urging MAN to encourage its members to maintain lawful electricity connections and comply with applicable regulations.

 Tegbe said the Federal Government had developed a four-pronged roadmap to address the challenges confronting the electricity sector, comprising grid standardisation, sector liquidity and sustainability, asset optimisation, and expansion and enhanced reliability.

 He said the government was also adopting a corridor-based approach to prioritise major electricity demand centres and improve power supply to industrial customers.

 According to him, Lagos, which accounts for about 50 per cent of Nigeria’s electricity demand, is the first priority corridor, followed by another corridor covering the Niger Delta region and Abuja.

 “We are conducting the technical audit to establish a robust diagnostic baseline. Part of the challenge is that we sometimes throw money at the wrong things without necessarily prioritising them,” the minister said.

 He explained that the audit, which had entered its fourth week, would identify infrastructure weaknesses and determine where interventions were most urgently needed.

 Tegbe acknowledged that manufacturers continued to struggle with electricity interruptions, poor power quality, vandalism and electricity theft, adding that the government was directing investments towards addressing the underlying problems.

 He said President Bola Tinubu had placed reliable energy at the centre of his administration’s agenda and was committed to opening the sector to investment while supporting infrastructure development and market reforms.

 The minister disclosed that the government had increased transmission capacity by more than 15,000 megavolt-amperes between 2023 and 2026, while recent installations had added another 1,300MVA in the preceding two months.

 He said the additional capacity would enable distribution companies to deliver more electricity to industrial, commercial and residential consumers.

 Earlier, the President of MAN, Dr Ifeanyi Okoye, said high electricity tariffs, unreliable grid supply and heavy dependence on fossil fuels had made industrial production exceptionally difficult.

 Okoye said energy expenses consumed nearly half of some factories’ operating budgets, weakening their competitiveness, increasing product prices and threatening jobs.

 He said manufacturers had continued to operate their own power infrastructure despite paying for electricity from the national grid.

 “When energy expenses claim nearly half of a factory’s operating budget, competitiveness evaporates, retail prices skyrocket, and jobs are placed on the line,” he said.

 The MAN president said the association was moving beyond advocacy to implement practical solutions through its Industrial Energy Cost Reduction and Adoption Programme.

 He identified the Manufacturers Power Development Company Limited, working with the German development agency, GIZ, and the Nigerian Energy Support Programme, as key partners in delivering the initiative.

 According to him, the programme would promote factory-roof solar installations, battery energy storage systems, captive natural gas generation and smart energy management networks to reduce production costs and protect manufacturers from global fuel price shocks.

Related News

• FG blames gas shortage as power outages hit five states
• Zamfara, REA to power 125,000 homes with solar mini-grids
• Ikeja Electric apologises for failing 20-hour power supply target

 He, however, stressed that manufacturers needed affordable, long-term financing to undertake the energy transition.

 “We cannot finance 21st-century industrial transitions with 30-day commercial bank loans at cut-throat interest rates,” Okoye said.

 He said the summit would bring financial institutions, climate funds and green investors together to develop long-tenured, low-interest financing instruments, carbon credit opportunities and asset-financing arrangements for manufacturers.

 The MAN president also called on electricity distribution companies to meet their obligations under the Band A tariff arrangement, urging the regulator to sanction defaulting operators or compensate factories affected by their failure to deliver the guaranteed 20 hours of electricity daily.

 Speaking on behalf of manufacturers, the MAN South-East Chairman, Ada Chukwudozie, said energy had become a question of survival and competitiveness for Nigerian manufacturers.

 She said manufacturers were increasingly financing and managing their own electricity infrastructure while struggling with rising production costs and limited access to capital.

 “We are effectively running a second power system paid for by ourselves, besides the grid we also pay for. And that is why for the Nigerian manufacturer, energy is no longer simply an operational issue. It is a question of survival and competitiveness,” Chukwudozie said.

 She explained that unreliable electricity supply forced manufacturers to make difficult choices between purchasing energy and raw materials, maintaining equipment and paying workers.

 Chukwudozie said diesel-powered generation had become particularly expensive, noting that a generator consuming about 0.28 litres of diesel per kilowatt-hour would cost more than N560 per kilowatt-hour in fuel alone when diesel sold for above N2,000 per litre.

 She contrasted this with the N209 to N225 per kilowatt-hour applicable to Band A electricity customers, stressing that unreliable grid supply increased manufacturers’ operating costs.

 The MAN official said the association had begun testing alternative energy solutions through its Industrial Energy Cost Reduction Adoption Programme in Anambra, Enugu, Ebonyi and Abia states.

 She identified Innoson Vehicle Manufacturing and Goulis Plc among the manufacturers engaged under the initiative, while describing Judy Polymer as a proof-of-concept project.

 According to her, the proposed 1.5-megawatt solar installation at Judy Polymer could deliver projected energy cost savings of more than 50 per cent.

 She said the proposed financing arrangement would also spare the manufacturer the burden of providing upfront capital for the energy infrastructure, allowing it to preserve funds for raw materials, salaries and production.

 Chukwudozie added that the project would incorporate smart metering, remote monitoring and energy dashboards to track electricity consumption, generation and actual cost savings.

 She said the association planned to use the 13 MAN branches to aggregate manufacturers’ energy requirements and create a pipeline of projects that would attract investors, financiers and technology providers.

 Meanwhile, the electricity regulator said it was working with distribution companies to improve electricity supply to industrial customers through targeted network investments.

 It said the Federal Government’s Distribution Sector Recovery Programme, supported by the World Bank, provided about $250m for distribution companies to improve their networks.

 The regulator also highlighted the net-billing framework established under the Nigerian Electricity Act 2023, which allows eligible renewable energy customers to export excess electricity to distribution networks and receive credits.

 It said the framework would improve the commercial viability of industrial solar investments, reduce dependence on expensive fossil fuels and encourage private investment in distributed electricity generation.

 The regulator added that manufacturers could strengthen their competitiveness by adopting cleaner energy sources as international markets increasingly imposed environmental and carbon-related requirements on products and supply chains.