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‘Electricity tariff disparity in manufacturing zones affecting competitiveness’

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The Manufacturers Association of Nigeria (MAN), has called on the Federal Government to prevail on the Electricity Distribution Companies (DisCos) to regularise the varying cost of electricity tariff across different states for the purpose of creating a level-playing ground for manufacturers in Nigeria.

According to MAN, disparity in electricity tariff has been observed to favour some regions of the country over others, adding that most worrisome is the fact that manufacturers who are made to pay higher tariffs sell their products in the same market. Therefore, cannot afford resultant effects of a wider gap in the prices of products as competitors in the industry.

MAN noted that the tariff differences in some instances are as high as 25 percent, making it impossible to ensure fair competition amongst manufacturers.

“The resultant effect of this tariff differential is that manufacturers under the DisCos with higher tariff rate sell at loss in order to sustain the market share, and if action is not taken urgently, the affected manufacturers may be forced to close down with looming adverse effect on employment and the economy,” MAN’s President, Mansur Ahmed noted.

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To this end, MAN recommended uniformity in tariff, and in the event where the disparity has to be maintained due to the difference in commercial activities, urged the government to intervene with the establishment of an equalization fund as provided in the petroleum sector. This will support DisCos with a smaller number of customers to ensure uniformity in tariff across Nigeria.

“MAN therefore seizes this opportunity to commend the efforts of the Federal Government aimed at sustaining economic growth and the development of the manufacturing sector in Nigeria, particularly the ongoing efforts at improving the quality of reliable and sustainable electricity supply in the country.

“The inadequacy of electricity supply has been one of the major challenges hindering the competitiveness of the manufacturing sector in the country, as manufacturers spent over 40% of the production overhead on electricity, leading to increase in cost of operation and prices of made in Nigeria goods when compared with prices of similar products from other countries.

“It is therefore worthy to note that improvement in electricity supply in terms of quantity, quality, efficiency in service delivery and pricing is critical to the competitiveness, growth and development of the sector,” it added.

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