By Our Reporter
The Manufacturers Association of Nigeria (MAN) has strongly opposed any increase in electricity tariffs, cautioning the Federal Government that such a move would exacerbate the current economic challenges faced by Nigerian businesses and consumers.
In a statement issued on Thursday, MAN’s Director-General, Segun Ajayi-Kadir, expressed concern over the potential impact of a tariff hike on the cost of production. He warned that it would worsen inflationary pressures, strain disposable income, and undermine the competitiveness of Nigerian products in both local and international markets.
Ajayi-Kadir described the planned tariff increase as “detrimental to businesses,” adding that it would drive up the cost of production, increase unsold inventory, and erode manufacturers’ profit margins. He further warned that such a move could lead to more business closures and job losses, especially in the private sector.
“The continued rise in electricity tariffs means that consumers will continue to bear the brunt of inefficiency in the electricity value chain. Manufacturers are at a disadvantage, as they cannot pass on the increased costs to consumers who are already grappling with reduced purchasing power,” he said.
The warning comes after reports surfaced about the government’s consideration of a 65% increase in electricity tariffs. However, Olu Verheijen, the Special Adviser to the President on Energy, clarified that the reports misrepresented her previous statements, explaining that tariffs currently cover about 65% of the actual cost of power supply. She stressed that while an increase may be necessary, it would be done carefully and without immediate hikes.
Ajayi-Kadir called on the government to commission a thorough review of the performance of the Distribution Companies (DisCos) following the last increase. He also urged the government to conduct a study on the impact of further increases on the manufacturing sector, businesses, and households in Nigeria.
He further questioned the “cost-reflective tariff template” used by the DisCos and called for a critical examination of their investments in distribution infrastructure.
MAN also reiterated its call for increased electricity supply, pointing out that Nigeria’s average daily power generation of 4,000MW is insufficient for the needs of over 200 million people. The association argued that the country requires more than 30,000MW of electricity to meet growing demand from both households and businesses.
Ajayi-Kadir concluded by urging the government to reconsider any tariff hikes and focus on improving the power supply to enhance the competitiveness of Nigerian businesses and ensure affordable energy for all Nigerians.