Manufacturers Raise Concerns Over Soaring Electricity Tariff
By Azeez Disu
The persistent rise in electricity tariffs in Nigeria has drawn sharp criticism from industry leaders and consumers alike, who argue that the increases are stifling economic growth and manufacturing competitiveness in the country.
Segun Ajayi-Kadir, Director General of the Manufacturers Association of Nigeria (MAN), expressed deep concerns about the impact of these tariff hikes on businesses and the broader economy. “Electricity is a critical input in manufacturing processes, and the incessant increase in electricity tariffs is hindering the performance of the sector and growth of the economy,” he stated.
The issue of electricity supply in Nigeria has been a long-standing challenge, exacerbated by the privatization of the power sector in 2013, which was intended to enhance energy security and boost industrial growth. However, the anticipated improvements have not materialized. Ajayi-Kadir noted that the operators in the electricity value chain often lack the necessary technical and financial capacity to deliver reliable services. With an installed capacity of approximately 10,000 megawatts (MW), the actual supply has consistently fallen short of consumer demands.
Recent statistics from the National Bureau of Statistics (NBS) highlight this shortfall, showing a decline in electricity supply from 5,909.83 gigawatt-hours (GWh) in Q2 2023 to just 5,612.52 GWh by Q2 2024, coinciding with a staggering 230 percent increase in tariffs. This decline represents a year-on-year decrease of 5.03 percent and a quarter-on-quarter decrease of 2.72 percent, raising alarms about the sustainability of energy provision in Nigeria.
Ajayi-Kadir emphasized that the proposed tariff increases would further burden manufacturers, eroding profit margins and exacerbating inflationary pressures. “This situation is detrimental not only to businesses but also to the average Nigerian, whose disposable income is already under strain,” he remarked. He warned that continued hikes could lead to increased unemployment and the closure of more private enterprises, crippling the nation’s economic landscape.
The Director General called on the Federal Government to reconsider any plans for further tariff increases and to conduct a comprehensive review of the performance of Distribution Companies (DisCos) in the wake of the last increase. He urged for a thorough investigation into the impact of these tariffs on the manufacturing sector and on households, as well as a critical examination of the cost-reflective tariff model that has been adopted by the DisCos.