Photograph — Reuters

The power supply of the manufacturing sector in Nigeria has been and is still a major challenge in ensuring effective productivity. The ripple effects of constant power outages are numerous, ranging from a decrease in industrial production, job loss due to outright closure or relocation to other countries by industries. The manufacturers also have to bear so much loss as the outage often occurs when they are in the middle of production.

Local manufacturers in Nigeria have indicated that a reason for their reduced expenditure on alternative power in 2018 has been as a result of an increase in power supply from the National grid. The expenditure of alternative power supply for local manufacturers stood at N43.19 billion in the first half of 2018 compared to N66.03 billion in the first half of 2017. The electricity supply, particularly from the distribution companies (discos), was at an average of 9 hours a day in the first half of 2018. The average number of power outages in this period reduced to about three times daily, which indicates a little improvement in the electricity supply to the sector and therefore reducing the spending on the alternative energy source.

The manufacturers have ascribed the reduction in expenditure on the alternative power supply to low utilization of energy in that period, due to a decline in economic activities and little improvement from the national grid. The manufacturers also admonished the government to ensure that the Independent Power Producers (IPPs) for on/off grid power generation are operational. This erratic power supply was affecting the manufacturing sector of the economy, hence a partnership between manufacturers and independent power developers to develop small capacity IPPs in industrial clusters was necessary.

The cost of generating power to run the production process through alternative power supply by manufacturers is very high. An example is the cost of acquiring generators as well as maintaining them in Nigeria. The cost of production is very high when manufacturers are left to generate their own power by themselves. This directly has an impact on the cost of goods in the market, therefore affecting the economy.

These alternative power supply sources are not as environment-friendly as the power supply from the national grid. An example is the use of coal and generators that have negative effects on the ecosystem. The use of these forms of electricity releases tons of Co2 in the atmosphere, leading to global warming.

The government needs to do more regarding the supply of power by the national grid for manufacturers, in order to reduce their spending on an alternative power supply. This would help reduce the cost of production and in turn reduce the market prices of goods and services. It would also curb the use of alternative power supply that is harmful to the environment.  

Comments

Elsewhere on Ventures

Triangle arrow