By Fola James
Hundreds of businesses are in peril of shut down in the face of recent increase in electricity tariffs by the federal government, business ownres have warned.
The National Electricity Regulatory Agency, NERC had in the new year approved various increase for Discos across the country.
The increase is expected to fetch over N1 trillion, which the government said is badly required to develop the sector.
But manufacturers said the increase will likely spiral the cost of production, sending many business owners out of business.
The manufacturer Association of Nigerian, the umbrella body of producers in the country said the decision was not a good one.
According to MAN, in a statement, the federal government should ensure the availability of electricity in the country before contemplating any tariff increase.
MAN said “We are still waiting for clarifications from the NERC on the tariff increment. The manufacturing sector is unhappy with the power situation in the country both in terms of availability and quantum and the price.
The industrial consumers are already the ones paying the highest rate and subsidising other consumers. So, to continue to increase the tariff when neither the quantum nor the quality of electricity supply has improved is not fair to the manufacturing and industrial sectors.
“We do understand that the power sector is in a very difficult situation and a lot needs to be done to firm things up. It goes beyond just increasing tariff.”
The sector should be totally overhauled for maximum performance, the association said “The sector needs to be completely restructured and overhauled.
They should ensure that proper capacity is built and the private operators, especially at the distribution level, must have the capacity and resources to run this sector properly.
That really goes beyond just throwing money into the sector. Already, the government has invested hugely in terms of capital and interventions. Over a trillion naira has been thrown into this sector with very little improvement to show for it.”
MAN further said “Increase tariff and injecting funds into the system is not the solution that will get us out of this situation. In the manufacturing sector, electricity is one of the most critical inputs.
There is no way our products can be competitive if we have to cope with this kind of energy supply and the cost of it. Clearly, we cannot continue to do what we have been doing all over again. Something drastic must be done to change the situation.
It should not be business as usual again. A very radical solution must be found to get us out of here. But we are still discussing with the regulatory body about this tariff increment.”
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