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Disparity in electricity tariffs worries MAN

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disparity-in-electricity-tariffs-worries-man

By Chikodi Okereocha

The Manufacturers Association of Nigeria (MAN) has called on the Federal Government to prevail on the Electricity Distribution Companies (DisCos) to regularise the varying cost of electricity tariff across different states in the country.

Its President Mansur Ahmed in statement over the weekend said this would create a level-playing ground for manufacturers, as disparity in electricity tariff has been observed to favour some regions of the country over others.

He said most worrisome was that manufacturers who are made to pay higher tariffs sell their products in the same market and cannot afford the resultant effects of wider gap in the prices of products as competitors in the industry.

The statement, which was made available to The Nation, said the tariff differences in some instances were as high as 25 per cent, making it impossible to ensure fair competition amongst manufacturers.

“The resultant effect of this tariff differential is that manufacturers under the DisCos with higher tariff rate sell at a loss in order to sustain the market share,” MAN said.

The association warned: “If action is not taken urgently, the affected manufacturers may be forced to close down with looming adverse effect on employment and the economy.”

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To this end, MAN recommended uniformity in electricity tariff and in the event where the disparity has to be maintained due to the difference in commercial activities, then government should intervene.

MAN said the government should intervene by establishing an equalisation fund as provided in the petroleum sector to support DisCos with smaller number of customers to ensure uniformity in tariff across the country.

“MAN, therefore, seizes this opportunity to commend the efforts of the Federal Government aimed at sustaining economic growth and the development of the manufacturing sector in Nigeria particularly the ongoing efforts at improving the quality of reliable and sustainable electricity supply in the country.

“The inadequacy of electricity supply has been one of the major challenges hindering the competitiveness of manufacturing sector in the country, as manufacturers spent over 40 per cent of the production overhead on electricity.”

This leads to increase in cost of operation and prices of made in Nigeria goods when compared with prices of similar products from other countries,” the statement said.

MAN noted that improvement in electricity supply in terms of quantity, quality, efficiency in service delivery and pricing was critical to the competitiveness, growth and development of the sector.

“This we believe is a recipe for sustaining the employment of over 65 million direct and indirect workers in the manufacturing sector,” it said.

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