Success Nwogu 
The Director of the Centre for Economic Policy Analysis and Research (CEPAR), Prof. Ndubisi Ifeanyi Nwokoma, has said the implementation of the Electricity Act 2023 will greatly address manufacturers’ N10.1 trillion annual loss.
He said the provisions of the Act, if well implemented, would address energy poverty in the country and help manufacturers to stop avoidable losses. The CEPAR boss, while speaking with New Telegraph over the weekend, also noted that manufacturers had been going through the challenge for a long time.
The Electricity Act 2023, which was assented to by President Bola Tinubu in May 2023, empowers states, companies, and individuals to generate, transmit and dis- tribute electricity. The Director-General of the Manufacturers Association of Nigeria (MAN) Segun Ajayi-Kadir, had said that the poor electricity supply situation in Nigeria was a major hindrance to the profitability of the manufacturers.
He said they incurred an annual loss of N10.1 trillion, which could be a two per cent share of the country’s gross domestic product (GDP). Prof Nwokoma said to address the power challenge, many of the manufacturers were now using their generated power supply. He noted that the cost was much, adding that they needed help for such a challenge and the huge losses.
Nwokoma said: “The poor electricity services have impacted negatively on national development. If you enhance power generation, you are enhancing Gross Domestic Product (GDP). There is an empirical study that showed that enhance the power sector by one per cent, you are enhancing the GDP by about three per cent. “In other words, the power sector is a growth driver when it comes to the development of the entire economy.
If you grow the power sector, you are actually growing the economy because many activities depend on power. “Such activities as manufacturing, agriculture and even services, depend on power avail- ability. Definitely, it impacts the entire system if you do not have adequate power services. That is one of the reasons why we do have a low contribution of manufacturing to GDP in the economy.
“The issue is that the alternative they had is now more expensive because the public power supply was not available and the manufacturers will have the backup option which is largely diesel. Not many of them use Premium Motor Spirit (PMS). “Diesel has been expensive for quite some time and some may have fallen back on PMS but with the increment in the price of PMS now, it will increase their cost of production. Definitely, it will affect the cost of production and the factor price of the manufacturing goods. It will have some negative impact.
“The high cost of diesel has also increased their production cost. Diesel has been quite expen- sive for some time now, the dif- ference between PMS and diesel is quite high so many of them would have switched on to PMS for power generation. “For those who are using die- sel before this policy of subsidy removal will not have much of an impact. However, it will definitely impact the price of manufactured goods either way. At the aggregate level, there will be an impact on the factor price be- fore it goes on for distribution. “Definitely, it will impact negatively on their factor cost and the selling price of the manufactured goods more so now that there is a high cost of transportation, definitely. There is a need for government to have a counter policy that will support the work of manufacturing.”
He said the high energy cost had increased national inflation, adding that the removal of subsidy on PMS and the unification of the nation’s foreign exchange had increased the cost of production and conversely cost of goods and services. The renowned policy analyst advised the government to make the economy liquid by spending more money so that the purchasing power of Nigerians and other residents would be increased.
Nwokoma said: “There is a multiplier effect in the economy of the high cost of energy and inflation. Whenever there is an increase in any price, it will lead to an increase in an- other price. “Apart from energy, there are other prices that have gone up because of the price of PMS. So directly or indirectly, prices will go up. It is not only energy that is involved in manufactur- ing. “You have the raw material and other cost and every other cost have gone up because of the foreign exchange unification and the subsidy withdrawal.
Many of the manufacturers were getting concessional rates to produce which is the channel inflationary rate. The other channel is subsidy removal. “Either way, even if they were using diesel before now, there are other channels to which it could affect the coun- try in price. So it will affect negatively the activities of manufacturing and even every other sector. So we should expect in the country increase in the price of manufactured goods across the board.”
He added: “One major thing is that the government needs to increase purchasing power. Even if the manufacturers pro- duce, people have to purchase the goods. So they need to in- crease demand by empowering consumers to be able to make effective demand for manufac- tured goods and other sectors.
