MAN condemns proposed 40% hike in electricity tariff

Edited by Damilola Adeleke

The proposed 40% increase in electricity tariff from July 1, 2023, has been strongly criticized by the Manufacturers Association of Nigeria (MAN). The association considers the proposed hike outrageous and warns that it could have detrimental effects on small and medium-sized enterprises (SMEs) in the country.

MAN’s Director General, Segun Ajayi-Kadir, expressed concerns about the burden such a significant increase would place on the manufacturing sector and the overall economy. He pointed out that the electricity tariff has already been raised by 186% in the past eight years, and the government’s own outstanding unpaid electricity bill of N75 billion demonstrates the heavy cost of electricity.

Ajayi-Kadir emphasized that a 40% hike at this time is simply unacceptable. He outlined several potential negative consequences of such an increase, including a rise in production costs for manufacturers, reduced profitability and ability to expand operations, potential paralysis of SMEs unable to afford the higher prices, decreased tax revenues for the government, and the inflationary impact on the market.

Furthermore, the increased cost of locally produced goods may make them less competitive compared to imported alternatives, both domestically and in foreign markets, potentially limiting export earnings. Ajayi-Kadir also noted that some manufacturing industries might consider relocating production to countries with lower electricity tariffs and guaranteed availability.

MAN’s expectations from the government and the Nigerian Electricity Regulatory Commission (NERC) include a focus on improving electricity generation, transmission, and distribution to ensure reliable power supply. They call for extensive consultations with the manufacturing sector and measures to prevent factory closures that would have adverse effects on employment and the economy. The association urges caution to avoid introducing burdensome measures that would further strain the manufacturing sector and the economy as a whole.