MAN urges Govt to address energy security to unlock full potential of industries, reduce cost of energy in manufacturing

• As stakeholders identify innovative solutions to boost energy security for manufacturers

Manufacturers Association of Nigeria (MAN) has highlighted the challenges being faced in the industry which includes unreliable power supply, high energy costs, and environmental concerns and urged the government to address energy security in order to unlock the full potential of the industries, reduce cost of energy in manufacturing.

This position was highlighted in the welcome address delivered by Otunba Francis Meshioye OFR, President, Manufacturers Association Of Nigeria At The Maiden Edition Of Manufacturers Energy Security Summit On November 19 2024, Lagos Oriental Hotel, Victoria Island, Lagos.

Meshioye stated that the maiden edition of the Manufacturers Energy Security Summit was organized by one of their special purpose vehicle platforms, the Manufacturers Power Development Company Ltd, adding that the event marks a significant milestone in their collective quest for energy security and sustainable manufacturing practices.

He noted that the summit has representatives from across the globe to share knowledge, expertise, and innovative solutions to address the pressing issue of energy insecurity, which has long hindered the growth and competitiveness of our manufacturing sector.

According to him, the theme of this summit, “Power Supply Adequacy for Industrial Growth in Nigeria,” reflects our commitment to exploring collaborative strategies that will enable manufacturers to reduce energy costs, transition to sustainable energy sources, and comply with Environmental, Social, and Governance (ESG) standards.

“As we convene here today, we recognize that energy security is not only a business imperative but also a national priority. Our manufacturing sector should be supported to account for a significant share of Nigeria’s GDP, and its growth is critical to our economic development.

“However, the challenges we face are clear: unreliable power supply, high energy costs, and environmental concerns. But we also see opportunities for innovation, job creation, and sustainable growth,” he said.

He expressed his gratitude to their partners, sponsors, and speakers for their support and expertise.

President, of MAN called on all stakeholders to work together to:

“Foster collaboration and knowledge sharing, as this forum is conceived as “Energy Solution and Accountability Forum” ESAF where our members and developers are expected to meet and explore the potentials and feasibility of developing projects.

“Identify innovative solutions to accelerate the journey towards energy security for manufacturers.

“Promote sustainable manufacturing practices that are more than ever before needed today.

“Support policy reforms that encourage investment in renewable energy that will help reduce our energy cost,” he emphasized.

He harped on the need to create a more resilient, competitive, and sustainable manufacturing sector that will benefit our economy, our people, and our environment.

In his speech at the summit, Segun Ajayi-Kadir, mni, Director General, Manufacturers Association of Nigeria lamented that manufacturers suffer greatly from power inadequacy and high cost of supply, noting that the sector has the biggest capacity to contribute to national economic development and the wellbeing of the people.

Ajayi-Kadir emphasized the urgent need to address these challenges and find lasting solutions, stressing that they should be able to highlight the significance of investing in our national grid to enable expansion and modernization to ensure reliable power supply for manufacturers.

According to the DG MAN, the investment is one thing, but there are other imperatives which he listed : “Grid modernization is key because  it will be a  driver of energy efficiency today. Therefore, smart grid is imperative and it is the direction such investment should  look to help improve stability of power supply.

“Explore innovative financing models that speak to sustainable energy technologies that will significantly improve energy efficiency.

“Public-private partnerships should be a game changer as the Government alone cannot do it. Therefore, it is important to work together and create a more resilient power sector that will drive economic growth and prosperity for Nigeria.

“There is a need for collaborative action to encourage stakeholders to work together to address infrastructure challenges. This is also an opportunity to explore innovative financing models which is one of the key takeaways for today and the reason for this August gathering this morning.”

He commended the resilience of Manufacturers who have managed to stay afloat, even as they continue to navigate the rather tough business environment, adding “Energy adequacy remains a major component of our imperative for competitiveness. So, the success of today’s deliberations should inform a paradigm shift for the better in our business landscape.”

DG MAN acknowledged government initiatives in supporting the development of the existing infrastructure, even as they crave for deliberate and collaborative action to accelerate the growth and development of power supply infrastructure and delivery.

“Let us embark on this transformative journey together, believing in the power of collaboration,” Ajayi-Kadir added.

Matthew Edevbie, Group Managing Director, Income Electrix Ltd, who spoke on challenges, prospects and strategies for sustainable energy as part of ensuring energy security for manufacturers in Nigeria; the holistic Energy cost reduction approach”, noted that Nigeria currently faces a huge electricity supply deficit , which manifests in high energy demand, huge supply-demand gap, low grid capacity, while the cost of infrastructure development, the supply demand gap is unlikely to be resolved soon .

Edevbie pointed out that a limited supply from the electric grid has forced industries to self-generate electricity, stressing that reliability, availability and cost of electricity to industries remain the bane of industrialisation in Nigeria.

The Income Electrix boss disclosed that Nigeria incurs N26 Billion in economic losses due to electricity shortages, but expressed his optimism that despite the challenges plaguing the power sector and industries in Nigeria, there exists prospects and opportunities by utilizing a holistic approach to improving reliability, availability and reducing our total energy spend.

He listed the approaches to include optimization of generation sources, efficient utilization of power and focusing on the use of low energy consuming products.

Cruise Ni, Director of Huawei Digital Power, Nigeria, who spoke on Technology Innovation for steady power supply in Nigeria: Optimizing Africa economic potential, emphasising on innovation and alternative energy supply to reduce manufacturing energy cost, noted that in the past five years the diesel cost, average grid tariff, prices of batteries and solar panels went high, stressing that there was need for improvement in innovation and technology to meet the rising demand.

Managing Director and CEO, Association of Nigerian Electricity Distribution (ANED), Sunday Oduntan lamented that the country’s power infrastructure was outdated, under maintained and insufficient to meet the growing need, adding that the transmission and distribution networks suffer from technical inefficiencies resulting from significant energy losses.

According to Oduntan, what is needed is investment in grid infrastructure to modern transmission and distribution networks to reduce losses and increase capacity in off grid solutions like mini- grid and solar homes in rural and underserved areas.

He stated further that investment is required to make power available to the consumers, large population, manufacturers and industrial areas, while power has to be affordable for all.

Mrs Jennifer Adighije, MD/ CEO Niger Delta Power Holding Company plc, stated that access to electricity is inevitable for industrialization and pledged to support businesses for off grid solutions.

Sanusi Garba, Chairman /CEO, Nigeria Energy Regulatory Commission, who spoke on the opportunities and challenges of the new electricity act for reliable power in Nigeria industrial hubs and free trade zones, stated that powering industry policies that deliberately seek to improve power supply to industrial clusters is required, adding that it could be achieved through embedded generation targeting industrial parks; distribution hub franchising; ring fencing arrangement and independent electricity distribution network.

Garba disclosed that all these could only be sustainable if the pricing is right as litigation against right pricing will only worsen supply, noting that legislation and regulation are essential but the key to unlocking a successful electricity market and economic prosperity is in our hands.

Dr Joy Ogaji, managing director, Association of Gencos, who spoke on ramping up national power generation with new investments to enhance power supply adequacy for the fast-growing industrial sector, affirmed that power is a strategic infrastructure for moving the economy forward and access is critical to industries and manufacturers.

Ogaji opined that decisions about investments in power generating capacity depend on expected returns and costs, the illiquid state of the NESI in addition to the fact that all plants are performing below optimum which does not encourage the 6000MW discourse.

She hinted that capacity utilization in any market is often used as a measure of productive efficiency, noting that “Demand drives production, even as power generation is instantaneous and cannot be stored and maximising capacity utilization, will lead to lowered power costs.”

“With a current installed capacity of about 14,000 megawatts, and utilization ranging between 3500 to maximum 4000, over 11 years post privatisation, the government’s aim to boost electricity access from 45% to 90% by 2030 is not feasible without a bench markable framework backed by credible data,” she emphasized.