Manufacturers’ energy spend drops by N24bn amid gas tussle

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Manufacturers spent N24.28 billion less on alternative energy sources in 2018, according to the Manufacturers Association of Nigeria (MAN).

Expenditure on alternative energy sources fell from N117.38 billion in 2017  to N93.1 billion in 2018, MAN’s economic review says.

“Paucity and high electricity tariff have posed dismal challenges for Nigeria’s manufacturing sector over the years,” MAN says.  “However, electricity supply appears to have slightly improved in the second half of 2018 at it stood at 10 hours per day as against nine hours per day recorded since the second half of 2017,” MAN explains.

 It adds that average number of power outage in the second half of 2018 stabilised at between three to four times per day since the first half of 2017.

Energy occupies 40 percent of manufacturing expenditure, according to players in the sector.

Many multinationals no longer rely on power distribution companies as they see the DisCos as unreliable.

Nigerian manufacturers say they are unhappy that franchisers of natural gas are dollarising payment of the energy source and selling to them at $$7.45 per standard cubic meter (scm), which is above the international price.

They say the situation is compounding their energy woes and raises production costs while lowering their competitive capacity.

“The persistent increase in the price of natural gas used by our members to power their plants and machineries has reached a crisis dimension,” Mansur Ahmed, president, Manufacturers Association Of Nigeria (MAN), said at an interactive forum on gas pricing in Lagos on April 30.

“Similarly, the continued denomination of price of gas in US dollars has made the product perpetually exorbitant and gradually getting outside the reach of majority of the manufacturers, particularly the small and medium industries,” he said.

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