Tinubu Electricity Act 2023: Ways to mitigate excessive spending — MAN
By Oluwaseun Ogunsola
The Manufacturers Association of Nigeria (MAN)has said that the signing of Electricity Act 2023 by President Bola Ahmed Tinubu would mitigate excessive spending to its members and Nigerians if well implemented following the removal of fuel subsidy.
This was disclosed in a statement by MAN DG, Mr Segun Ajayikadir and was signed by Executive Officer, Corporate Service Division to MAN, Mrs Chisom Oguezuonu.
Ajayi-Kadir said that the Nigerian power sector had witnessed various challenges in its electricity value chain over the past decades.
However, he said poor policy enforcement, over-regulation, instability of gas supply and bottlenecks in its transmission network.
He said that those problems resulted in poor electricity supply, frequent power outages and persistent national grid collapses, thereby disturbing the economy’s growth.
He also noted that Nigeria’s inadequate electricity supply hindered the profitability of manufacturers with an annual economic loss valued at about N10.1 trillion or two per cent share of the country’s Gross Domestic Product (GDP).
According to him, the total amount spent by manufacturers on alternative energy approximated from N77.21 billion in 2021 to N144.47 billion in 2022.
However, he stated that the newly signed Electricity Act 2023 would lead to a drastic fall in the cost of alternative energy and address numerous challenges faced within the sector.
“MAN has consistently pushed for the need to charge cost-reflective electricity tariffs to avoid extortion of our members.
“Fortunately, it is of great delight that this new Act fits like a glove as it will help actualise a cost-reflective tariff, considering the healthy price competition it will bring between the states and private investors.
“The country’s epileptic power supply is one of the prominent reasons for the relocation of some of our members.
“Provided the new Act adequately addresses the challenges in the power sector, we are quite optimistic that such development will encourage the inflow of manufacturing Foreign Direct Investment (FDI), boost the sector performance and increase the sectoral contribution to the economy.”
The MAN DG added that the newly signed Act would boost the Internally Generated Revenue (IGR), investment in renewable energy, improve infrastructure, stable power supply and less tax burden on manufacturers.
He noted that empowering private manufacturing companies to generate electricity would unleash massive investment in backward integration activities, a significant enabler of energy security within the sector.
Ajayi-Kadir, however, urged the government to consider some of the association’s recommendations to avoid annulling the benefits of the Electricity Act 2023.
“Following the removal of subsidy, this is another reflection of the boldness and commitment of the new administration towards the diversification and decentralisation of the power sector.
“However, we must tighten the security infrastructure as no investor wants to do business in a terrorised economy.
“Government has to render legal, financial and technical support to state governments yet to establish electricity market laws, while state governments should partner with existing agencies and operators in the power sector. The costs of building new power distribution networks can render the investment less lucrative.
“The success of the Act largely rests on its effective implementation; therefore, the new President should appoint a committed and incorruptible Minister of Power that has broad experience of the operations and politicking within the power sector,” he said.
