Manufacturing Sector’s Performance Beset by Energy Crisis
The Manufacturers Association of Nigeria (MAN), has said that the current energy crisis, that emanated from the scarcity of fuel and high cost of diesel, gas and Premium Motor Spirit (PMS) or petrol are limiting the performance of manufacturers and urged for government interventions in ameliorating the needs of the sector for growth.
The manufacturers identified inadequacy and high cost of energy as the core challenges of manufacturing operations in the country.
The MAN pointed out that Nigeria with over 200 million people and a huge productive sector that is energy-dependent, but electricity distributed in the country remains a mere 4000MW.
The Manufacturers CEO Confidence Index (MCCI) reports have continuously said that poor supply of electricity ranked among the top challenges of the sector.
It noted in addition that the energy challenges are variously represented as the cause for the poor competitiveness of the economy and manufacturing sector.
The Association stated in its report that Nigeria is naturally endowed with hydro-carbon with oil reserves of about 37 billion barrels in 2021 and gas reserves of about 5.8 trillion cubic meter.
Unfortunately, it said the nation has failed to exploit these resources to the benefit of the economy.
“As a member of the Organization of Petroleum Exporting countries (OPEC), production of crude has continuously fallen below PEC quota for the country due to gross inefficiency in the management of the oil sector. Of the 1.8 million barrels quota for Nigeria, the country has not been able to export beyond 1.3 million barrels even though it has been officially admitted that this crude oil theft is going on in the creeks,” the report read.
The association noted in addition that Nigeria has four national refineries: PH1 built in 1965 with a capacity to refine 60,000 barrel per day (bpd); PH 2 was built in 1989 with a capacity of 150,000 bpd; Kaduna Refinery & Petrochemical was commissioned in 1980 and fully expanded in1986 with a capacity of 110,000 bpd; and Warri Refinery & Petrochemical was commissioned in 1988 with a capacity of 125,000 bpd.
The association lamented that unfortunately, since the refineries were run down, access to these products are heavily import dependent notwithstanding the associated high cost and inconveniences.
“Unfortunately, these refineries are made moribund for preference of importation of refined products at exorbitant costs interlocked with the controversial Fuel subsidy scheme by inefficient management,” it added.
According to the Association, there is the need for a wake-up call to resuscitate the national refineries, stressing that Nigeria is about the only OPEC rank that imports refined petroleum products.
Consequently, the association mooted that to resuscitate domestic refining and improve energy situation in Nigeria, the following recommendation are critical: Review the current status of the four national refineries to determine their current true state; Commission the CHIYODA Group, the Japanese company that built the national refineries to rehabilitate them to resume domestic refining; Review the Nigerian energy policy and ensures available energy sources, particularly natural gas is optimally explored and exploited; Create functional incentive to attract private sector investment in gas aggregation to end the current gas flaring; and Create incentive to resuscitate private sector investment in the petrochemical industry.