According to data compiled from the annual and bi-annual reports of the Manufacturers Association of Nigeria, expenditure by manufacturers on alternative energy sources, excluding power from distribution companies, surged by 82 percent. The figures rose from N25 billion in 2014 to N144 billion in 2022, as revealed by findings from The PUNCH.
Throughout this period, manufacturers collectively spent approximately N783 billion to generate their power, supplementing the inadequate supply from power distribution companies to sustain their factory operations.
The breakdown delineates the progression of expenditure: N25 billion in 2014, followed by N59 billion in 2015, escalating to N129.95 billion in 2016. Subsequent years witnessed expenditures of N117.38 billion in 2017, N93.11 billion in 2018, N61.38 billion in 2019, N81.91 billion in 2020, and N71.22 billion in 2021.
Highlighting the challenges posed by energy costs on members of the association, Francis Meshioye, the President of MAN, emphasized that energy expenses accounted for a substantial portion—ranging between 35 to 40 percent—of manufacturers’ total operational costs. Meshioye also noted that due to the burdensome nature of energy expenses on business profitability, several multinational manufacturers were contemplating an exit strategy from Nigeria.
He said, “We rejected the hike in electricity tariff because, in the first instance, energy cost is very high for manufacturers, particularly those who consume much, like steel manufacturers. It takes an average of 35 to 40 percent of their total costs.
“Any increase in electricity tariff makes it harder on us. The harder it is, the harder it will be for consumers. When this is so, it means that the demand for products will drop. Like I said in my previous interview, the profit margin will be low.”
The significant increase in alternative energy costs came despite several efforts by manufacturers to address the issue of skyrocketing energy costs.
