Grid failures increase manufacturers’ alternative energy costs

Manufacturers in the country have spent four times the average cost of power last month due to the incessant grid collapse.
 

Co-founder of Kazih Kits Limited, Dr Chinedu Azih, said diesel costs have become extremely unbearable since October as the power situation deteriorated.

“The power was slightly manageable in September but from October till today, we have had barely 50 hours of power cumulatively. How are we expected to be productive with 50 hours in almost two months? We cannot work overnight again because we cannot afford to run the generators. Production that takes us two days before now takes a week because there is no power. Customers refuse to take on added costs and we have to stagger production.
 
“We buy diesel twice a week at roughly N300,000 each time; so twice a week comes to N600,000. For comparison, in September when the power situation was better, we bought diesel maybe three or four times in the whole month. We are not making any profit, we just don’t want to close down and send workers home. The power situation must be fixed immediately if the government is still interested in our survival next year,” he explained.
   
According to a recent Manufacturers Association of Nigeria (MAN) first half of the year survey, an increase in electricity tariffs by over 200 per cent imposed by DisCos has significantly raised the cost of electricity for manufacturers. This, it said, coupled with ongoing power outages, placed additional financial strain on the sector.
 
According to the report, manufacturers spent N238.31 billion on alternative energy sources in H1 2024, a 7.69 per cent increase from H2 2023. The surge in costs was driven by higher prices for diesel, gas, and other energy sources underscoring the urgent need for manufacturers to invest in self-energy generation.
   
Former MAN president, Apapa branch, Frank Ike Onyebu, lamented his factory’s rising daily diesel spend, explaining that no business can survive burning millions of Naira on diesel alone weekly.
 

“If power was more regular, 20-22 hours daily, we would spend a quarter of that, about N50 million monthly. Despite multiple grid collapses and zero power supply in over a month, we were still slapped with a hefty bill from our DisCo. We complained to NERC via letters and phone calls, and we were simply ignored. This situation is going to lead to many more companies shutting down; many of us cannot pass these costs and increase prices because Nigeria’s purchasing power is gone.
 
“Even food producers that fall under essential commodities are suffering. Now imagine those of us in non-essential services. Sales have dropped dramatically but overhead costs keep rising. Come to our factory’s warehouses, it is filled with unsold goods. This situation must improve quickly before more of us are forced out of business,” he said.