Following a repot that the University of Lagos (Unilag) has been cut off from the national grid over electricity debt, the Manufacturers Association of Nigeria (MAN) has called for the reversal in electricity tariff increase, saying it is worsening the already harsh operating environment.
The Director-General of MAN, Segun Ajayi-Kadir, who made this known in an interview with New Telegraph in Lagos, said that many organisations and not just only factories or commercial businesses were feeling the heat of increased tariff.
He said there was no doubt that local manufacturers had remained resilient against daunting macroeconomic and infrastructure inadequacies, notably power.
According to him, manufacturers need power at a fair price, adding that power accounts for about 40 per cent of manufacturing cost, depending on how power-intensive the manufacturing process is. Ajayi-Kadir explained, “We know that a good number of universities are being shutdown over students protests for lack of power.
A large number of hospitals, teaching hospitals are seriously challenged. “Teaching hospitals are saying they were told they would have to pay N100 million per month, so the new power tariff is a very significant challenge for every businesses now. So it has two sides, indeed to recover the cost of power to attract investors.
At the same time, the person who is using the power should be able to pay for it. You must have enough of income. So we are in that situation right now where we have to create; we have to create very very unique solutions.
“One of those solutions amongst others is enough of kinetic powers. For example, a typical university does not need to be in the national grids because it’s a host community in the campus, so it should be able to attract an investor to provide kinetic power to the campus at negotiated price.
So we expect to see a lot of that going forward.” Also, he added that “the method of producing the power cannot reduce the cost. If you are using diesel to run your plant to supply power, it’s very much expensive than gasoline.
If you are using solar, it’s much more cheaper. But you have to pay the initial cost stage of connection. “So we are in this stage now in the country where everyone is being forced to look for alternative solutions to reduce the cost of power.
“But what is absolutely certain is that if you are an investor you want to invest in the power plants in Nigeria and the tariff cannot cover your costs of operation you will not invest. “So we are in such situation where we try to solve the problem that how do we make power profitable for anybody to invest in.
How do we ensure the consumers can pay? “To move steadily from traditional form of power to other sources of power that is where we are in now, currently in the country.” Speaking on dedicated power supply, the MAN boss stated:
“You are beginning to see that in Lagos for example, the Lagos Island IPP situated at Marina, that is powering all businesses in the Lagos Island. “So it is the way we are going.
If we talk about China, we don’t realise that as big has China is, they have thousands of power plants, the smaller ones all over the place, so you don’t have a national grid that collapses every time like Nigeria.
“So any country that wants to solve its power situation must have what is called a distributed grids. You know, you may have one or two giants power plants like Kanji but in those countries are like standby generators.
“If any of the smaller ones fails to work, you don’t know because those very big ones are not the main source of power for a lot of countries, they are there to backup the smaller ones in case if the smaller ones fails.
So the system, engineers called it redundancy.” He stressed: “So, we must have a lot of redundancy, the first power supply and the second power supply, so you and I don’t know we are seeing power in your house you don’t know which power plant is working. So that is the essential reason for building more power plants in the country.”