The Manufacturers Association of Nigeria has stated that frequent hikes in electricity tariffs are hindering the performance of the manufacturing sector and the nation’s economic growth.

MAN director-general Segun Ajayi-Kadir expressed this concern in a statement on Thursday.

Mr Ajayi-Kadir stressed that electricity is a crucial input in manufacturing, significantly affecting production costs and product prices. He emphasised that no nation could achieve substantial industrial development without ensuring energy security.

According to him, any increase in tariff will harm the competitiveness of Nigerian products and businesses.

He warned that such would worsen production costs, intensify inflationary pressure, and further reduce consumers’ disposable income.

Mr Ajayi-Kadir added that it would increase manufacturers’ unsold inventory, erode profit margins, raise unemployment, and force more private businesses to shut down.

“It was due to the critical role of energy security in Nigeria’s industrial aspirations that the power sector was privatised in 2013. Unfortunately, this privatisation has not delivered the expected results,” he said.

The MAN boss noted that the sector struggles because operators lack the technical and financial capacity to ensure optimal performance. He highlighted that Nigeria’s installed electricity capacity has consistently been around 10,000MW.

Yet, he noted, this capacity remains underutilised due to the limited ability of GenCos and DisCos to generate and distribute sufficient electricity nationwide.

“Despite failing to meet demand, there have been continuous tariff increases without a corresponding improvement in supply quality. According to the National Bureau of Statistics, electricity supply was 5,909.83GWh in Q2 2023 but dropped to 5,769.52GWh in Q1 2024 and 5,612.52GWh in Q2 2024.

“This decline followed the implementation of a tariff increase exceeding 230 per cent. This represents a 5.03 per cent year-on-year decrease and a 2.72 per cent quarter-on-quarter decline,” he said.

Mr Ajayi-Kadir noted that MAN has repeatedly called for an increase in electricity supply beyond the average 4,000MW provided daily to over 200 million Nigerians.

He stressed that Nigeria requires more than 30,000MW to meet the growing demand from businesses and households adequately.

The MAN chief urged the government to review the performance of DisCos following the recent tariff increase. He called for a study on its impact on manufacturing, businesses, and households.

He also urged the government to critically assess DisCos’ cost-reflective tariff model and audit their investment in distribution infrastructure.

The federal government has, however, debunked reports suggesting an imminent 65 per cent increase in electricity tariffs. The government clarified that its focus remains on improving power supply, ensuring targeted subsidies, and expanding metering nationwide.

(NAN)