The need for state of emergency on power supply, petroleum products
That the present state of epilepsy of power supply has begun to threaten businesses, and at large the economy, is not questionable. Frantic lamentations over the strains the failure of power supply is posing to businesses, particularly those on small-scale which operations rest heavily on power. Worse has been complaints of rising bills despite the epileptic supply. This has been tough for businesses where the installation of pre-paid meters have not found a place. Recent realities have seen Nigeria power generation dropping drastically below 1,145 Megawatts, leaving most parts of the Country without electricity supply. Total blackout have not been excluded from the scenarios in recent times. Blame trade among the lines of the operating blocks of the system has been a reoccurring narratives. Allegations and counterargument among the Generation Companies, Transmission Company of Nigeria and the Distribution of Companies viz-a-viz the government have only left more controversies than any solution.
Recent hike in petroleum products, particularly premium motor spirit (PMS), popularly called petrol, and diesel, largely used for manufacturing operations as an alternative to electricity, has worsened conditions for businesses. In a lamentation over the prevailing nationwide shortfalls which over three months have seen collapse of the national grids and the sporadic state of falling generation of power, the Manufacturers Association of Nigeria (MAN), Kwara/Kogi branch, has raised alarm over the hiking of diesel price, lamenting it is becoming almost impossible for them to operate.
In a statement by its Chairman, Pharm. Bioku Rahmon, the Association which appealed to the Federal Governments to urgently come to the aid of the manufacturing industry, warned that failure to remedy the situation would result in massive unemployment due to closure of factories. According to him, the manufacturing industry battling to recover from the COVID-19 induced economic hardship, has been worst hit by the current energy crisis, crippling the sector.
“National Grid-Supplied Electricity has recorded no improvement. Renewed wave of Inflationary pressures further plunged the buying masses into extreme depths of poverty with concomitant erosion of customers’ Disposable Income (DI) and hence culminated in low patronage of our industrial finished products. Foreign Exchange (FX) Scarcity has worsened significantly, even as Industry players continue to experience a sharp and growing shrink in the FX windows. This has led to major downturns and stress in the purchase and acquisition of foreign components for production.
“The above have long resulted to sharp depletion in the Key Performance Indicators (KPI) of the Manufacturing Industry such as capacity utilisation, unsold goods inventory, and sector contribution to National Gross Domestic Product (NGDP) especially since 2020. In 2021, the unfriendly operating environment and inconsistent business and investment policies of government further paralyzed the manufacturing Industry leading to weak results in the sector, all of which were further exacerbated by the COVID-19 pandemic. As if the above previous and unsolved woes were not enough, and with no solution to the epileptic grid-supplied electricity, Automotive Gas Oil (Diesel) which became a viable alternative energy source open to Industries, has suddenly become a torn in our flesh. Figures released by the National Bureau of Statistics (NBS) showed that diesel which sold so highly at an average price of N312 in February 2022 has now more than doubled, soaring to an all-time high price of about N800 ($1.92) this month.
“Power normally accounts for over 40 percent of factories costs, and with this major cost element now more than doubled, its cost implications in the overall cost outlay for industries have precipitated an alarming rise in the production costs, running costs and costs of transporting raw materials and finished products; all of which have now become most unbearable to players in the Industry. Compelled by the above industrial woes, many companies have resigned to closing down and laid off all of their staff holdings,” he lamented.
Energy threats against businesses in Nigeria pose omen of negative strings, capable of strangulating businesses in the Country. The dilemma before businesses with undesirable choices of epilepsy of national power supply and rising cost of petroleum products to run generators as alternatives, have left unsavoury conditions for businesses. The associated cost of production on a rising scale has brought to the fore, rising prices of goods and services. The eroding purchasing power of consumers by the toughening of economic conditions has left tough conditions for businesses too. The brunts suffered by both businesses and households have left unsavoury narratives for the economy at large. The debilitating effects on the Country have left the fabrics of the Country threatened. It has become an emergency the Government must address with alacrity.
