The Manufacturers Association of Nigeria (MAN) says the cost of independent power generation in the manufacturing sector increased by more than 100 percent from N58.8 billion in 2015 to N129.9 billion in 2016.
This represents a total increase of N71.13 billion.
The development is no thanks to the instability in electricity supply from the national grid, which has continued to adversely affect the country’s manufacturing industry.
A breakdown of the annual report by MAN showed that N66.99 billion was spent in the second half of 2016 on independent power generation, as against N29.48 billion in the same period in 2015.
It also increased by N4.03bn when compared with N62.96bn recorded in the first half of the year.
The report indicated that the average supply of energy to the sector was about 36 percent or eight hours daily.
MAN explained that the rising cost of independent power generation, added to the arbitrary increase in electricity tariffs, were responsible for the high cost of production in the sector, thereby making it difficult for made-in-Nigeria goods to compete favourably with imported goods in terms of pricing.
The association also noted that another major difficulty experienced by its members in the year under review was “acute shortage of foreign exchange, high lending rate and exclusion of some vital manufacturing raw materials from the official foreign exchange market”.
This was however addressed by the preferential forex allocation to manufacturers by the Central Bank of Nigeria (CBN) in the second half of 2016, a development that MAN said was “responsible for the production momentum gained in the economy in the second half of the year”.
The association urged the federal government to “revisit the power sector reform and fully implement the power sector road map to improve the efficiency of the generation, transmission and distribution companies”.
It also advised the government “to re-classify manufacturing sector into strategic gas users from the current commercial classification”.
MAN also said there was need to ensure proper settlement of acquired properties, such as land for electricity equipment installation, to forestall any incident that could lead to destruction of the infrastructure.