•AFC blames entrenched interests for inefficient power sector

Stories By Yinka Kolawole

The Manufacturers Association of Nigeria (MAN) has reiterated that high energy cost remains a major challenge confronting the manufacturing sector in Nigeria, with electricity alone accounting for more than 35% of manufacturers’ cost structure.

This is even as the African Finance Corporation (AFC) blamed interest groups such as sellers of generators and diesel for the intractable power situation in the country.

Speaking at the 4th Adeola Odutola Lecture and Presidential Luncheon to round off the activities marking the 52nd Annual General Meeting (AGM) of MAN, President of the Association, Francis Meshioye, appealed to the federal government to wade into the tariff rift between manufacturers and the electricity Distribution companies of Nigeria (DisCos).

He lamented that high energy costs and frequent hike in electricity tariffs were compounding the binding constraints of the manufacturing sector.

“It is unfortunate that the Distribution companies (DisCos) persistently disconnected manufacturing facilities from the national electricity grid, despite payment of current electricity charges on existing tariff, and against court injunction prohibiting them.

“We have consistently maintained that manufacturers will struggle with a rate above 100% increment in the electricity tariffs.

“Electricity costs alone accounted for more than 35% of an average manufacturer’s cost structure.

“The government should wade in to address the issue of electricity tariffs for the manufacturing sector to thrive,” Meshioye stated.

Delivering the lecture with the theme, “The Imperatives of an Intentional Development of the Nigerian Manufacturing Sector”, AFC President, Samaila Zubairu, declared that there are interest groups that prefer the importation and sales of generators and diesel rather than allowing adequate supply of electricity in Nigeria.

Zubairu, who was represented by the Chief Investment Officer at AFC, Sameh Shenouda, also called for the total restructuring and reform of the country’s power sector for it to attract the needed investments.

He said AFC will not channel finances to the power sector until proper restructuring is done in the sector by the government.

His words: “I am going to be honest with you. There are interest groups that prefer to sell generators and diesel than for the country to have electricity supply. You have to be honest about the problem so that you can tackle it.”

 “I think we will be happy to invest in the power sector. But there is a lot of work to be done by the government before it would attract a lot of investments.  

“Collection is a problem. Power theft is a problem. However, if there is an opportunity to build a power plant that sells directly to the private sector and does not go through the Independent Power Project’s (IPP) structure, AFC will be happy to look into it.

“But to build a large-scale infrastructure power plant in Nigeria before the sector is reformed is a big risk that we cannot support.

“What we will be happy to do is to participate with the government and anyone that is interested in sharing ideas and experiences in restructuring the sector first.”