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Electricity Tariff hike: Discos cut electricity supply to 100 industries – MAN

The Director-General of the Manufacturers Association of Nigeria, Segun Ajayi-Kadir, has disclosed that electricity distribution companies have disconnected over 100 manufacturing firms...ĊONTINUE.THE FULL R£ĄÐING.

In an exclusive interview with The PUNCH at the annual general meeting of the MAN’s food, beverage and tobacco sector, on Thursday in Lagos, he revealed that 10 of the association’s members had been disconnected in Kano.

“We do not favour legal action against the Discos and NERC. We do not want to go there. One of our branches has done so, and that subsists. The Disco in Kano is still disconnecting our members despite the injunction. As an association, we do not want to engage in such (legal action) but it comes as a last resort.

“You can imagine that as of today, more than 100 of our members have been disconnected, which means that their workers have been asked to go home. It means that their production processes have been halted. It means that they are not able to fulfil their obligations to their suppliers, and they have started to lose money,” he explained.

According to the MAN DG, the crux of the matter is that manufacturers are asked to pay electricity bills that will take manufacturers out of business.

“A company told me that it was paying N7-8m before, now it is paying N32m. The calculation is that the profit you could have made, you are not able to make it. So, you need to decide to go ahead and produce and pay an electricity bill that is more than the profit you would have made or shut down.

So, we are gradually seeing a situation where more and more industries are shutting down, because if you disconnect an industry that does not have an alternative source of power, it practically goes out of business,” he declared.

According to the MAN DG, the crux of the matter is that manufacturers are asked to pay electricity bills that will take manufacturers out of business.

“A company told me that it was paying N7-8m before, now it is paying N32m. The calculation is that the profit you could have made, you are not able to make it. So, you need to decide to go ahead and produce and pay an electricity bill that is more than the profit you would have made or shut down.

So, we are gradually seeing a situation where more and more industries are shutting down, because if you disconnect an industry that does not have an alternative source of power, it practically goes out of business,” he declared.

Meanwhile, the immediate past Chairman of the Food, Beverage and Tobacco Sector of MAN and Managing Director of Intercontinental Distillers Limited, Chief Patrick Anegbe, stated that the spate of insecurity in the country was hampering backward integration in the food industry.

“How do you backwards integrate when you are talking about insecurity? The insecurity in the country poses a very serious threat to backward integration,” he averred.

He added that multiple taxes had also eaten deep into the profit margins of manufacturers, noting that production costs had continued to skyrocket.

“Multiple taxation is really affecting our business. Taxes here and there. The cost of production has gone up very high to the extent that margins are so low. We are just barely surviving.

“The government should look for a way of reducing these multiple taxations and eliminating some of them,” he asserted.

He revealed that the food, beverage and tobacco sector’s production value rose by 68.2 per cent or N614.0bn in the first half of 2023 compared to N900.45bn recorded in the second half of 2022.

“The sector’s local raw material sourcing for the period under review saw a decline from 70 per cent in H2 2022 to 66.8 per cent in H2 2023, though this is an improvement from 62 per cent in H1 2022 (MAN H2 Economic Review),” he explained.

The newly elected Chairman of the sector of MAN, and Managing Director of La Casera Company, Chinedum Okereke, noted that the importance of the food sector cannot be undermined, as it guarantees the country’s food security and plays a vital role in job creation.

“We will collaborate and engage more with the government. Most time, the government may have good intentions but the lack of engagement with stakeholders is a problem. So, we will not sit back and wait for them to engage with us, but we will proactively go to them for engagement,” he stated.

The Deputy Director of the National Agency for Food and Drug Administration and Control, Olugbenga Aina, who was one of the speakers at the AGM, advised manufacturers not to see regulation as a burden.

He noted that the best form of regulation is self-regulation, adding that manufacturers must be innovative.

“Fostering competitiveness in the food, beverage and tobacco industry with regards to ensuring that local content production meets international best practices for increased export demand and national revenues, is key to the Renewed HOPE Agenda and revitalising the Nigerian economy.

“The significance of the food, beverage, and tobacco sector in Nigeria cannot be overstated. Food, beverage and tobacco is the greatest contributor at N3,814.50bn or 52 per cent of the Nigerian manufacturing sector total in 2013, according to National Bureau of Statistics,” he stated.

According to Aina, aligning with global standards opens up new export opportunities and enables manufacturers to tap into new markets and contribute to Nigeria’s economic diversification.

Also, the Head of Corporate Affairs & Sustainability Rite Foods Limited, Ekuma Eze, who was one of the speakers at the event, stressed the need for food industries to invest in research and development to create innovative technologies and solutions that differentiate.

He added that they must build strong partnerships to combine strength and resources to create value-adding products.

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