Brands May Soon Increase Price of Products As Electricity Tariff Hike Lingers
With the plan to increase electricity tariff by 40% by July 1st in Nigeria, brands may soon increase the price of their products to meet up with the increase in the cost of production when the hike is implemented.
“This will increase the cost of local made products in the market and complicate the rising inflation rate in the country.” the Manufacturers Association of Nigeria (MAN) in a statement sent to Brand Times disclosed.
It said that the 40% hike will drastically increase the cost of production. It revealed that the manufacturing industries supplement the unreliable electricity supply with alternative energy sources such as diesel which it use to power their generators but it has also become very expensive.
MAN explained that “On average, surveyed data by MAN suggests that manufacturers spent at least N144.5bn on sourcing alternative energy in 2022, up from N77.22bn in 2021. This translates to about 87% increase in the cost of access to alternative energy sources by manufacturers within a year. In the last 8years, electricity tariff has been increased by 186%. The fact that Government itself is owing N75billion in unpaid electricity bill is indicative of how burdensome the cost of electricity has become.
“Therefore, it is highly concerning for manufacturers to witness the electricity tariff skyrocketing beyond the present embattling high prices, starting July 1. A 40% hike at this time is simply outrageous.”
It also stated that a further rise in electricity tariff could lead to increase in costs of production, profit margins will reduce, high probability of activities paralysis, and potential decrease in the revenue collectable by government.
It also added that manufacturers will ultimately pass on the additional cost to the consumers of their products, recession of manufacturing activities will occur, the manufacturing sector’s competitiveness will definitely worsen, and high probability of outward investment.
MAN urged the government to shelve its plans, pointing that “The expectation of the manufacturers is that the Federal Government and NERC will ensure improvement in electricity generation, transmission and distribution that will lead to adequate and reliable electricity supply in the country, rather than increasing the tariff on the mere 4000MW to meet all revenue needs of stakeholders in the electricity supply industry.
“Government should ensure that at least 90% of electricity consumers are metered to ensure consumption reflective electricity bill payment, formulate electricity policies that will aid investment in energy industry to increase generation capacities that will usher in large scale production of electricity and ensure effective implementation of the recent Electricity Act (2023) that is aimed at increasing the electricity supply in the country.”
It also urge states and private investors to take advantage of the Electricity Act 2023 to eradicate the energy poverty of their people.