Nigeria: New electricity price threatens 5 million jobs in the manufacturing sector

Business News


By Industrial Digest 

The Manufacturers Association of Nigeria (MAN) has warned that the government’s new electricity price will lead to ” large scale unemployment across 76 manufacturing sub-sectors with 5 million people on their payrolls.”

In the revised Multi-Year Tariff Order (MYTO) for January to June 2021 signed by the new Chairman of Nigeria Electricity Regulation Commission (NERC), Engr. Sanusi Garba, on December 30, 2020, the tariff was hiked from N2.00 to N4.00 per kilowatt per hour of electricity, effective January 1, 2021.

MAN, therefore, called on the government to as a matter of urgency and national interest, suspend the recent increase in electricity tariff until the economy improves or certain mutually agreed economic attainment thresholds are met.

Segun Ajayi – Kadir, Director-General of the association, said that the adjusted tariff is not manufacturing friendly because most MAN-member companies are classified in the ‘D’ categorization (D1, D2, and D3) where the tariff is the highest.

“Manufacturing sub-sectoral groups with higher energy consumption which include Basic Metal, Iron and Steel and Fabricated Metal Products; Domestic & Industrial, Rubber and Foam; Non-Metallic Mineral Product; and Chemical & Pharmaceuticals sectoral groups would be worse-off.

“This increase in tariff, which is coming at the commencement of the African Continental Free Trade Agreement (AfCFTA) and barely 3 months after the huge increment was imposed on electricity users in October 2020, is not manufacturing friendly. It appears to be insensitive to the prevailing precarious situation of the sector.

” The increase is coming at the wrong time and would reverse the little gains in the recent past. This is against the background of the prevailing harsh operating environment, the increasing burden of taxes, the enormous spending on self-generated electricity up to the tune of N70billion (excluding hundreds of billions Naira spent on settling monthly electricity bills ), and the ailing state of a sector that is just recovering from a lockdown occasioned by the pandemic “ he said.

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