Manufacturers’ Alternative Energy Source Gulps N80bn In 2018

Industrialists may have spent a whopping N80 billion on providing alternative energy this year (2018),
This stemmed from the inability of Nigeria’s power distribution companies to supply regular power to manufacturers.

For instance, a report from the Manufacturers Association of Nigeria (MAN), stated that about N43.19 billion was expended in the first half of 2018 alone by local manufacturers, while about N40 billion could have been spent so far on alternative energy by manufacturers in the second half of the year.
Thus, statistics from MAN showed that power supply from the distribution companies remained core challenge of the manufacturing sector in 2018,.

Conversely, the study indicated that the manufacturers’ spending on alternative energy source in the year under review is lower when compared with year 2017 when manufacturers spent N117.38 billion on alternative energy sources.

Basically, the report also showed that there was a slight improvement in electricity supply and consumption from the distribution companies to manufacturing firms this year compared to 2017, while stability in the petroleum industry where there are no national fuel strike prompted hitch-free availability of alternative energy source to manufacturers.

A breakdown of the MAN report on manufacturers’ spending on energy source in the first half of 2018, showed that average electricity supply in the period was at nine hours per day since the second half of 2017. However, average number of power outage in the period dropped to three times dally, indicating slight improvement in electricity supply to the industrial sector.

“Electricity supply, particularly from the distribution companies, remained core challenge of the manufacturing sector in the first half of 2018,” the report noted. “Average hours of electricity supply in the period remains at nine hours per day since the second half of 2017. However, average number of power outage in the period dropped to three times dally, indicating slight improvement in electricity supply to the sector.

“Expenditure on alternative energy source in the sector stood at N43. 19 billion in the first half of 2018, which is 34.6 per cent and 15.9 per cent, lower than N66.03 billion recorded in the same half of 2017 and N51.35 billion of the preceding half respectively.
“The decline in expenditure on alternative energy source may be ascribed to low utilization of energy in the period due to general sluggishness of economic activities and slight improvement in electricity supply from the national grid.

“However, total expenditure on alternative energy source in the sector in 2018 doubled”.
These alternative energy sources included Automotive Gas Oil (AGO) otherwise known as diesel, natural gas among others.

Speaking on this development, the Director-General, MAN, Segun Ajayi-Kadir disclosed that the expenditure on alternative energy source by manufacturers in Nigeria are still high when compared to other neighbouring countries, stressing that regular electricity supply is still an issue in Nigeria.
According to him, if there is general improvement in power supply, inflationary goods prices could have reduced drastically in the market and manufacturers would also be willing to produce more.

On the reason why the expenditure on the alternative energy source this year is lower than 2017, the director-general said that kudos should be given to the Federal Government for stabilizing the petroleum industry, saying that the year was hitch-free of national strike in the petroleum industry, which propped up fuel availability for manufacturers and consumers.

“We know that electricity supply in Nigeria is still a general challenge despite the effort being put in place by this present government to ensure regular power supply,” he said. “ But, no doubt, there has been relatively improvement in power supply in the country, that is why, you can see that manufacturers’ spending on alternative energy this year is lower when you compare it to that of last year’s. Notwithstanding, we (manufacturers) still believed that the amount is still high and with more regular power supply, we would have been spending less on alternative energy source during production and this will definitely bring down inflation in the country”.

Also commenting, the Chairman, Lagos Chamber of Commerce and Industry of the Small and Medium Enterprises Group (LCCI-SMEG), Abiodun Oladapo, flayed the continued increase in the price of AGO otherwise called diesel in the country, saying that the hike is putting pressure on manufacturers’ businesses.
Particularly, the prices of AGO have been hovering between N255 and N260 per litre in most filling stations in Lagos while the product’s price has increased considerably outside Lagos and its environs.

Source: NewTelegraph