The Manufacturers Association of Nigeria (MAN) has expressed concern over alleged displacement of local meter manufacturers and assemblers in the downstream power sector, as the federal government implements the National Mass Metering Programme (NMMP) Phase II.
The body said that the advertised financial and technical specifications by the Transmission Company of Nigeria (TCN) are skewed against local manufacturers as they are outrageously stringent and negate the Central Bank of Nigeria (CBN) guidelines for NMMP’s implementation.
Director-General, MAN, Segun Ajayi-Kadir, said the Federal Government’s intervention in the power sector to accelerate energy meter supply and bridge the metering gap ought to be in sync with the country’s overall national economic development objectives.
Some energy analysts and economists have flayed the decision to import energy meters, saying it is obvious that local manufacturers cannot produce affordable meters, while others have faulted the government for considering importation.
Speaking with The Guardian, an energy economist, Dr Percy Chukwuka-David, said the decision to import would lead to more capital flight .
“MAN is justified in their outrage. Why are we empowering foreign manufacturers at the detriment of the ones right under our noses? We are complaining of scarce FX and this would only worsen the situation.
“The government is discouraging local manufacturing and growth in the industry. If the issue is that the local manufacturers are not producing up to a certain standard, all they must do is provide specifications and ask them to improve the standards to meet international specifications. It is pure economic sabotage on the government’s part by encouraging capital flight and economic slowdown.
“We are not helping the economy to grow when we abandon those that can do it here to spend millions of dollars that the country does not have to produce outside. Don’t be surprised that someone in a position of authority or a government contractor is behind this,” he said .
Applauding MAN for speaking out on behalf of the local meter manufacturers, he wondered how this government intends to grow the economy if it keeps outsourcing everything to foreigners. And if the costs were going to be too high, he urged the government to subsidise some aspects for the local producers so they can meet up with production.
Chukwuka-David said if the government truly has the interests of Nigerians and the local manufacturing sector at heart they would be more careful when taking such decisions. In turn, he urged the local manufacturers to strive to be present at fora where such decisions are taken to avoid being sidelined.
“The government is killing local manufacturers slowly; it is almost as if they don’t want them to grow. I can only advise them to always try and be present on the decision table so they can advocate for themselves.”
Adding that this was not in alignment with the federal government’s backward integration policy for the local manufacturing sector, he said the government was causing serious setbacks for local manufacturers.
“If the government is serious about backward integration, we will know by their actions. Government doesn’t help them, doesn’t promote them, keeps coming up with arbitrary policies that suffocate them and even with all these, the government still award contracts to foreigners. This is capital flight and would affect the local manufacturing sector greatly,” he said.
Another energy consultant, also in the private sector, Femi Omisanjo, differs in his view. According to him, the World Bank was not happy with what happened in the first phase of the meter purchase as there were a lot of controversies and issues of fraud.
He said till date, so many meters have not been accounted for while others disappeared into thin air. He added that there was also the issue that the local meters were very expensive compared with those gotten even from neighbourin g African countries.
He said: “Meters should not be that expensive to the extent that customers cannot afford them. The government felt the meters produced locally were too expensive and the financier, the World Bank agreed with this position.”
He said while MAN’s argument is valid also as the country is in dire need of locally produced content, local content cannot be forced at the detriment of poor Nigerians. Adding that purchasing power is at an all-time low, he argued that consumers should not be paying as much as 100,000 for a single-phase meter and almost 300,000 for a three-phased meter.
Advocating for common ground and an 80:20 principle, he said this would help local manufacturers remain in production while they improve over time. Insisting that it is not economically viable for the country to depend on local meters for now, he said NERC deliberately increased the specifications as the quality of meters from the first phase was very poor.
“I am not saying they do not have a case but the economic reality is that the local meter manufacturers cannot produce affordable meters for Nigerians and consumers would be affected because DisCos cannot give out meters and consumers cannot afford the meters so where do we go from here?”
“Presently, the government is trying to quickly close the meter deficit which is now at about four million, how long can we wait for our local manufacturers to meet up? After closing the deficit, then we can look inwards but if we insist we want to do backward integration at all costs, can the average Nigerian afford it? I can categorically say that nobody manufactures meters here in Nigeria, they are simply coupled here and not made here. The parts are all imported and they are coupled here which is why it is more expensive.
By the time you factor in FX, testing, cost of importation and other factors, they cannot compete with imported meters which are brought in already ready for use. It is a matter of economics of scale and at this point, we must be realistic with what can be done and what cannot be done,” he said.
Ajayi-Kadir insists that importation portends grave danger for the power sector as the country may witness a repeat of the ugly scenario in 2012 when local manufacturers were sidelined in the meter supply and the nation was greeted with the supply of substandard meters supplied by foreign companies that were awarded the contract that was later removed from the network.
“The position of the TCN that installation will provide employment opportunities to Nigerians will completely pale into insignificance when compared with a ratio of one to 10 jobs that will be created if local manufacturers are included in the scheme. It should be recalled that, in keeping with the Federal Government’s backward integration policy and the advent of the NMMP intervention, manufacturers made huge investments in expanding their capacities, trained and promoted a highly skilled workforce to meet the demands of the power sector as envisaged in the NESI.”
He added that this intentional denial of local manufacturers does not take into cognisance the performance of the nascent local manufacturing in the last two years. He added that they were denied the opportunity to fully execute the contract for the supply and installation of four million energy meters under the first phase of the NMMP scheme as a result of the unrealistic terms that arbitrarily fixed the contract prices extremely and far below the approved regulatory prices of energy meters in the country.
“Additionally, the contractual term of payment after the supply and installation of the meters have not been adhered to, thereby jeopardising the financial capabilities of our members that participated in the scheme.”
