Nigerian Manufacturers To shut factories over high electricity bills.

Some manufacturers in the country have said that
the increase in electricity tariffs will force them to
shut down their operations in the near future if
development is not urgently addressed.
Different producer groups of the Manufacturers
Association of Nigeria on Wednesday said if the
Nigerian Electricity Regulatory Commission failed to
revert to the old Multi Year Tariff Order, the
industrialists would have no option but to down
tools.
Speaking at an enlarged stakeholders' forum in Abuja
on the revised MYTO 2.1, the manufacturers argued
that the new order had led to an astronomical
increase in electricity tariffs, a development they said
was capable of crippling their operations because
consumers would not be able to absorb the
commensurate rise in products' prices due in an
already saturated market.
NERC had announced that following the conduct of a
special review, it approved the revised MYTO 2.1,
which came into effect on January 1, 2015.
"A major highlight of the MYTO 2.1 is a six-month
freeze from January 1, 2015 on tariff increase for
residential consumers. The increase in tariffs will
only affect non-residential consumers; that is,
commercial consumers of electricity," the Chairman,
NERC, Dr. Sam Amadi, had said.
But the Coordinator, Steel Manufacturers Group of
MAN, Mr. Felix Okojie, stated that all producers
across the country were shocked by the quantum
leap in the new electricity tariffs approved by NERC.
Asked what would be the reaction of the
manufacturers if NERC failed to revert to the old
order, Okojie said, "We will shut down our
operations. Tell me what else you expect me to say. If
they insist and we cannot pay the bills, then the only
option open to us is to close down the factories. And
then, more Nigerians will be thrown into the labour
market and insecurity will increase.
"I agree with you that the action will be too extreme,
but that is why we are asking NERC to rethink
because the action they have taken now is completely
anti-progress. It doesn't help the Nigeria Industrial
Revolutions Plan; it goes completely contrary to all
these concepts."
He argued that electricity tariffs in the country were
among the highest in the world, stressing that most
developed and developing nations were considerate
of the rates given to consumers.
Okojie said, "China, India, USA, Russia, Angola and
some other African countries that have stable
electricity pay between N3, in comparative terms, to
N21 per Kwh. But here in Nigeria, we don't have
constant electricity and power firms are demanding
N28.28 per Kwh.
"We have more darkness than light and yet pay high
tariffs, for what? Is it for darkness or for light?"
He explained that most manufacturers had made
their long-term projections based on the MYTO order
laid out for 2012 to 2017.
"The MYTO 2012 to 2017, which was meant to run for
five years, formed the basis of our members' long-
term planning, which NERC's sudden increase has
now seriously interrupted. This is because we were
not informed of the revocation of the MYTO order.
We consider this sudden action unfair to our
members."
Okojie stated that residential customers were
indirectly paying the new tariff despite claims by the
commission that they would only begin to pay in July.
He said, "The truth is that all of us are operating the
new order because we are either landlords or
tenants. You will notice that where you were paying
N1,200 before, your January bill will now be about
N5,000.
"So, indirectly, they have started taking the money,
which they promised that it will be in six months.
Why are we fooling ourselves?"
The Executive Chairman, Sunchi Integrated Farms
Limited, an Enugu-based firm that specialises in
hatchery, feed mills and soya oil refining, Mr. Sunday
Ezeobiora, said the new tariffs would ground the
company's operations if not reversed.
Ezeobiora said, "We wish to state that the current
increase in tariff by 94.62 per cent for the C2 category
as approved for the Enugu Electricity Distribution
Company by your commission is beyond our
absorption capacity and will halt our operations and
render our workers jobless.
"We cannot afford to pay our January 2015 electricity
bills based on the new tariff and still remain in
business. We, therefore, plead that the
implementation of the new tariff order be halted
pending wider consolations with agro-allied
industries."
Defending the revised MYTO 2.1, the NERC chairman
stated that it was approved because it would help
provide clarity as to how prudent costs would be
recovered by efficient operators.
Amadi said, "The Electric Power Sector Reform Act,
2015 obligates NERC to ensure that every efficient
operator recovers prudent costs of producing and
supplying electricity. At the same time, we are also
obligated to ensure that tariffs are fair, reasonable
and affordable.
"Because the fundamental drivers of costs in this
industry – inflation rate, foreign exchange, cost of
gas and available quantity – could change quickly;
there is a minor review of the tariff structure every
six months to re-index the tariff to these changing
fundamentals."
He, however, admitted that the tariffs that businesses
and industries were paying for electricity in the
country was high and advocated for the production
of embedded power by firms that had the capacity to
do so.
Amadi added, "Truly, the cost that businesses and
industries pay in Nigeria is high. But the highest
portion of this cost comes from self-supply of
electricity. If power from the grid is stable and
adequate, we will see significant decrease in the cost
of energy.
"How to increase energy supply to industrial and
commercial consumers in Nigeria is the most
important and urgent challenge we face."