Expenditure by manufacturers on alternative energy sources (excluding power from distribution companies) jumped by 82 percent, from N25bn in 2014 to N144bn in 2022. This is according to data collated from the annual and bi-annual reports of the Manufacturers Association of Nigeria.
According to data collected from the annual and bi-annual reports of the Manufacturers Association of Nigeria, manufacturers’ expenditure on alternative energy sources, excluding power from distribution companies, witnessed a significant 82 percent increase, soaring from N25bn in 2014 to N144bn in 2022. Over the eight-year period, manufacturers spent a staggering N783bn to generate their own power, supplementing the insufficient supply from power distribution companies to operate their factories.
The breakdown of the data reveals that manufacturers disbursed N25bn in 2014, followed by N59bn in 2015, and a substantial rise to N129.95bn in 2016. Subsequently, expenditures were recorded at N117.38bn in 2017, N93.11bn in 2018, N61.38bn in 2019, N81.91bn in 2020, and N71.22bn in 2021. The continuous upward trend underscores the challenge manufacturers faced in dealing with soaring energy costs.
Speaking with The PUNCH, the President of MAN, Francis Meshioye, highlighted the impact of energy costs on the association’s members, stating that it accounted for a significant portion, ranging from 35 to 40 percent, of their overall production expenses. He expressed concern that the escalating energy expenses were severely affecting business profitability and competitiveness.
As a consequence of the burdensome energy costs, more multinational manufacturers were contemplating exiting Nigeria. The rising trend of these companies contemplating an exit underscored the urgency to address the issue of energy costs to retain a favorable business environment and encourage investment in the manufacturing sector.
Manufacturers in Nigeria have been grappling with the challenge of an unreliable power supply from the national grid, necessitating investment in alternative energy sources to maintain production operations. The dependence on self-generated power has become a necessity for manufacturers to ensure consistent production output and to mitigate the impact of power disruptions on their business operations.
To promote a conducive business climate and encourage both local and foreign investments in the manufacturing sector, it is crucial for the government to address the issue of energy costs effectively. Policy measures and investments in improving the power infrastructure and grid stability are essential to alleviate the burden on manufacturers and bolster their competitiveness in the global market. By addressing the challenges of energy costs, Nigeria can retain and attract more manufacturing companies, fostering economic growth and creating employment opportunities for its citizens.
