Yemisi Izuora
Escalating energy costs which has worsened in recent time following the ongoing Middle East conflict and grid disruption, the Manufacturers Association of Nigeria (MAN) is calling for broader energy policy review to address their high production costs.
Frank Ike Onyebu, who raised the issue pointed out that electricity supply in the Amuwo-Odofin industrial area of Lagos had been inconsistent, going as high as 48 hours of complete blackouts with no explanation.
Onyebu, who is former MAN President, Apapa branch, expressed serious concerns saying that in the last few months, public power supply has worsened with some areas reporting days and even weeks of complete blackout.
This poor power situation is in deplorable condition, he said, further lamenting the sharp increase in the cost of petrol and diesel, alternatives that most homes and businesses all over the country use to generate energy.
With petrol going from N830/litre to N1,250 in March, a 50.6 per cent increase and diesel rising to N1650/litre from N950, businesses are under cost pressure.
Manufacturers expenditure on alternative energy continues to go up, and the Association has continually decried and described as inimical to production and productivity.
Reports indicate that Manufacturers spent approximately over a trillion naira on alternative energy in 2024, a 42 per cent increase from the N782 billion recorded in 2023.
Last year, MAN estimated that their alternative energy consumption exceeded N1.5 trillion, driven by increased unreliability of the national grid, which collapsed regularly, constant blackouts and high cost of fuel and diesel to power generators.
Onyebu, said, “We have to provide money to buy diesel and we all know diesel is now very expensive. In the past, despite strictly regulating how we used the generator, we spent about N30 million monthly on diesel.
“This completely excludes what we pay to get power from the grid. With this increase in fuel prices, we are looking at about N45-50 million in diesel costs by month’s end,”
Onyebu, who is also the Executive Director of Universal Luggage Ltd, noted that this was affecting production, maintaining that the company could not afford to run the generators for too long and had to halt production or wait for power from the grid.
He urged the government to at least ensure an adequate supply of crude to the Dangote Refinery so that Nigeria is not overly affected by the price of crude in the international market.
“This is not the way to run a business. How can we become an industrialized country like this when we don’t even have the most basic, which is power, to produce?
“Petrochemical is the primary raw material for making plastics, nylons, packaging materials and so on and the price has also shot up. So, you should expect that the prices of everything are going to increase in the next couple of days, as we do not produce in isolation.
“The cost of manufacturing keeps going up, but the demand for final products keeps dropping because Nigerians are getting poorer,” he said.
Also, the National president, Association of Small Business Owners in Nigeria (ASBON), Dr Femi Egbesola, regretted that manufacturers and businesses are on the verge of closing down.
He warned that if care was not taken, the manufacturing sector may collapse at any moment.
“Electricity supply is going from bad to worse and the alternative, which is generators, is no longer an option for many businesses because of the cost of diesel,” he said.
He said small and medium-sized businesses spent over 40 per cent of their profit to provide alternative energy.
He said currently, it had skyrocketed to over 80 per cent; a situation he said was not acceptable, as most businesses had started using their working capital to provide energy.
“Nigeria is supposed to be a producer and refiner of crude oil and it is a wonder why the global market has such a strong, negative effect on us. The current government promised to fix electricity before coming into power, but instead, the power situation has gotten significantly worse,” he lamented.
He pointed out that the real sector is the most affected by the ongoing crisis. Egbesola expressed that the current situation had a negative implication on the economy, whose effects were yet to fully materialise.
“By the time we realise how terrible the situation really is, I fear we might not be able to fix it again. We have been crying about electricity for years, but the government does not seem bothered.
“We read that Aso Rock has gone fully solar. What does that mean for us, still forced to depend on the grid? What does that mean for businesses and manufacturers” he said.
He added that there could be no meaningful productivity without stable electricity, stressing that solar energy, which is chosen as an alternative, is not only expensive but also has its own limitations, as some equipment could not be powered with the facility.
He insisted that if electricity were stable, businesses would not need diesel to produce.
“The government is claiming their reforms are working and things are good on paper, but we, who are the engine room of the economy, are not seeing any positivity or improvements.
“Many workers are finding it hard to go to work because they cannot afford transport fare, which is now more than their daily wage. We cannot look away; things have completely fallen apart. Workers cannot even eat well again as most of their money is going to transport and buying fuel for generators,” he said.
Challenging the government to disclose to Nigerians what was done with the money saved from the removal of fuel subsidy three years ago, he said there had been zero improvement in key infrastructure, especially electricity, social amenities, and others.
He further called for a temporary subsidy on petrol and diesel to help businesses survive this trying period until a 24-hour electricity supply could be guaranteed.