MAN: Poor electricity costs sector N130bn in the first half of 2016

The Manufacturers Association of Nigeria (MAN) says the cost of independent power generation in the manufacturing sector increased by more than 100 per cent from N58.8 billion in 2015 to N129.9b in 2016, representing a total increase of N71.13b.

The development, according to MAN, was due to the instability in electricity supply from the national grid, which has continued to adversely affect the country’s manufacturing industry.

A breakdown of the annual report by MAN showed that N66.99b was spent in the second half of 2016 on independent power generation, as against N29.48b in the same period in 2015.

It also increased by N4.03bn when compared with N62.96bn recorded in the first half of the year.

The report indicated that the average supply of energy to the sector was about 36 per cent or eight hours daily.

MAN explained that the rising cost of independent power generation, added to the arbitrary increase in electricity tariffs, were responsible for the high cost of production in the sector, thereby making it difficult for made-in-Nigeria goods to compete favourably with imported goods in terms of pricing.

The association also noted that another major difficulty experienced by its members in the year under review was “acute shortage of foreign exchange, high lending rate and exclusion of some vital manufacturing raw materials from the official foreign exchange market.”

This was, however, addressed by the preferential forex allocation to manufacturers by the Central Bank of Nigeria (CBN) in the second half of 2016, a development the group said, was “responsible for the production momentum gained in the economy in the second half of the year”.

The association urged the Federal Government to “revisit the power sector reform and fully implement the power sector road map to improve the efficiency of the generation, transmission and distribution companies”.

It also advised the government “to re-classify manufacturing sector into strategic gas users from the current commercial classification”.

MAN also said there was need to ensure proper settlement of acquired properties, such as land for electricity equipment installation, to forestall any incident that could lead to destruction of the infrastructure.

…as generation loses N11.37bn in two weeks

Electricity generation in the country took a downward trend in the last two weeks as generation companies, GENCOS lost about N11.37 billion cumulatively, while power loss amounted to 1,293 megawatts, MW, data obtained from the Nigerian Electricity System Operator, a section of the Transmission Company of Nigeria, TCN, shows.

Much of the amount was lost in the third week of month, when N7.35 billion was recorded, as against N4.01 billion recorded the previous week. The third week also had much of the loss in terms of power supply as it recorded 1,151mw loss, as against 142mw recorded the previous week. As has been observed in the past, the losses were been attributed to gas and water constraints.

There were reported increased gas constraints at Omotosho I and II, Olorunsogo, Alaoji NIPP, Geregu I, Geregu NIPP, while increased line constraints were reported on Gbarain NIPP, Ibom and Olorunsogo 1. Also, high frequency due to loss of distribution companies, DisCo feeders remained a significant constraint to generation

Within the period under review partial collapse occurred as recorded on July 19 2017. Increasing high frequency constraints led to reduced generation. Generation was limited at Okpai due to mechanical problems, while Egbin ST5 tripped due to Egbin/Ikorodu line tripping. Also, evacuation at Odukpani plant impeded by Calabar – Ikot Ekpene line was recorded within the period under review.

Meanwhile, the Minister of Power, Works and Housing, Mr. Babatunde Fashola, has said that the challenges of the power sector in Nigeria are manmade and not technical.

Fashola, who made the statement at a recent forum at the University of Lagos, said there was no mystery in achieving stable and reliable electricity supply but that all stakeholders must conform to guidelines of the sector’s roadmap.

He said the roadmap was aimed at getting incremental, stable and uninterrupted power but that achieving set targets required step-by-step approach. He cited sabotage in governance; non-payment of tariff, poor investment, among others as some of the challenges frustrating the power sector. The minister noted that the issue of stable power was characterised by many years of broken promises but added that the sector was making progress.

“If men and women created these problems, in my view only men and women can solve them. You and I have a role to play, I have stood up to play my role, have you?” he asked.