The Manufacturers Association of Nigeria (MAN) has expressed its belief that the signing of the Electricity Act 2023 by President Bola Ahmed Tinubu would serve as a relief to its members and the Nigerian populace. The association emphasized the importance of proper implementation, especially after fuel subsidy removal.
In a statement released by Ms. Chisom Oguezuonu, Executive Officer of MAN’s Corporate Service Division, Mr. Segun Ajayi-Kadir, the Director General of MAN, highlighted the numerous challenges that have plagued Nigeria’s power sector over the past few decades. He cited factors such as inadequate policy enforcement, excessive regulation, gas supply instability, and bottlenecks in the transmission network as the root causes of the sector’s troubles.
These issues have resulted in erratic electricity supply, frequent power outages, and persistent collapses of the national grid, which have significantly hindered the country’s economic growth. Ajayi-Kadir estimated that the insufficient electricity supply in Nigeria has led to an annual economic loss of approximately N10.1 trillion, equivalent to two percent of the country’s Gross Domestic Product (GDP).
Manufacturers have had to invest heavily in alternative energy sources to cope with the unreliable power supply. The expenditure on such energy solutions rose from N77.21 billion in 2021 to N144.47 billion in 2022. However, the recent enactment of the Electricity Act 2023 is expected to considerably reduce alternative energy costs and address the various challenges prevalent in the sector.
MAN has consistently advocated for implementing cost-reflective electricity tariffs to prevent the extortion of its members. Ajayi-Kadir expressed satisfaction with the new Act, as it is aligned with this objective and will foster healthy price competition between states and private investors. He emphasized that the inadequate power supply has been a significant factor in relocating some manufacturing facilities.
The MAN DG expressed optimism that the comprehensive resolution of power sector challenges through the new Act would attract Foreign Direct Investment (FDI) in manufacturing, enhance sector performance, and increase the sector’s contribution to the economy. He also highlighted the potential benefits of the Act, including increased Internally Generated Revenue (IGR), investments in renewable energy, improved infrastructure, stable power supply, and reduced tax burden on manufacturers.
Furthermore, empowering private manufacturing companies to generate electricity would drive significant investment in backward integration activities, thereby bolstering energy security within the sector. However, Ajayi-Kadir urged the government to consider the association’s recommendations to ensure the full realization of the benefits presented by the Electricity Act 2023.
He stressed the need to bolster security infrastructure to create a conducive business environment, as investors hesitate to operate in an economy plagued by terrorism. Ajayi-Kadir called on the government to provide legal, financial, and technical support to state governments that still need to establish electricity market laws. Additionally, he encouraged state governments to collaborate with existing agencies and operators in the power sector, as the costs associated with constructing new power distribution networks could diminish the attractiveness of investments.
Ultimately, the success of the Electricity Act 2023 depends on its effective implementation. Ajayi-Kadir recommended the appointment of a dedicated and incorruptible Minister of Power with extensive experience in the operations and dynamics of the power sector.