Nigeria: Manufacturers Pick Holes in the New Electricity Tariff Structure

13 October 2020

The Manufacturers Association of Nigeria (MAN) has faulted disparity in electricity tariffs by Distribution Companies (DISCOs) across Nigeria, noting that it creates uneven playing ground which may lead to closure of some companies

President of MAN, Engr Mansur Ahmed, in a statement made available to Vanguard, noted that the tariff differences in some instances are as high as 25 percent making it impossible to ensure fair competition among manufacturers. He called on the Federal Government to prevail on DISCOs to regularise the varying cost of electricity tariff across different states for the purpose of creating a level playing ground for manufacturers in the country.

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Ahmed stated: "Most worrisome is the fact that manufacturers who are made to pay higher tariffs sell their products in the same market and cannot afford resultant effects of wider gap in the prices of products as competitors in the industry.

"These tariff differences in some instances are as high as 25% making it impossible to ensure fair competition among manufacturers.

"The resultant effect of this tariff differential is that manufacturers under the DisCos with higher tariff rate sell at loss in order to sustain the market share and if action is not taken urgently, the affected manufacturers may be forced to close down with looming adverse effect on employment and the economy."

MAN has therefore appealed for uniformity in tariff and in the event where the disparity has to be maintained due to the difference in commercial activities, it urged government to intervene with the establishment of an equalization fund as it is in the petroleum sector to support DisCos with smaller number of customers in order to ensure uniformity in tariff across the country.

Ahmed reiterated that manufacturers spend over 40 percent of their production overhead on electricity in Nigeria due inadequacy of electricity supply, leading to increase in cost of operation and prices of made in Nigeria goods when compared with prices of similar products from other countries.

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