Electricity Tariff: MAN warns of more Multinational Companies exiting Nigeria

The Manufacturers Association of Nigeria (MAN) has warned that implementation of the proposed hike in electricity tariff by power distribution companies (Discos) may force more multinational companies to relocate their factories outside Nigeria.

President of MAN, Otunba Francis Meshioye, gave the warning while speaking to newsmen, stressing that some international manufacturing firms had already exited the country due to the harsh operating environment and power challenges, adding that any further hike in tariff would lead to an exodus of companies, and urged the government to reconsider the move.

Recall that some of the DisCos issued various public notices recently that the electricity tariff would be raised by about 30 to 40 percent for selected categories of consumers with effect from July 1, 2023.

However, some the Discos back-pedaled on their earlier announcement of a tariff hike, noting that the Nigerian Electricity Regulatory Commission (NERC) had not yet approved the hike.

The MAN President said: “In every system there’s always a core structure and this includes the elements that make up the total cost spent in generating your revenue. Now, what we experience as manufacturers is that energy cost is a major cost in processing our products.

“The downsizing of businesses in Nigeria, for instance, shows that businesses are not doing very well. So, this power issue and other things have made some manufacturers, particularly international businessmen to relocate from Nigeria to other countries.

“Therefore, anything to reduce this energy cost will be very beneficial both to manufacturers and the masses in general. So, it (power) is a high cost to us, and a major driver in terms of cost. At the same time, it could lead to other thing

“It is one of the things that make some manufacturers to seek to move their business to another region and site their factories there. It is not the only reason, but, of course, it is one of the major ones.”

Meshioye explained that the other reasons that might make manufacturers to exit Nigeria, thus: “We have the unpredictability of the foreign exchange rate. In a business model, the more predictable the forex, the better you are. But the availability of the forex itself is another thing. All these are problems that border manufacturers.”