Power Sector Reform: Why MAN is against tariff hike

power transmission infrastructureThe Manufacturers Association of Nigeria (MAN) members are against the Multi-Year Tariff Order (MYTO) introduced by the Nigerian Electricity Regulatory Commission’s (NERC) because it usually leads to hike without corresponding improvement in electricity supply, with attendant increase in production costs.

MAN President, Dr Frank Udemba Jacobs, who made the disclosure said that without sustained improvement in electricity supply, the tariff hike would not benefit consumers at all levels.

“The issue of electricity supply is of great concern to MAN considering that it has been a major challenge to the sector. MAN has contested the various Multi-Year Tariff Orders of the Nigerian Electricity Regulatory Commission (NERC) and demanded that fixed charges be removed. We hope and believe that we will achieve it.”

Jacobs revealed that there is a pending litigation against the increase in tariff by MAN against NERC, adding that any proposed increase affecting MAN members will be subjudice.

According to him, since the increase in tariff would not be supported with increased electricity supply, manufacturers would still depend on self-generation of electricity and that would push up production costs and prices of manufactured goods.

“The initial analysis made by MAN showed that the removal of fixed charges and the recent increase in tariff under the proposed new tariff order (MYTO 2.3),  will raise the cost of electricity and that of the cost of production”, he stressed.

Mr. Jacobs urged federal government to fashion out a robust policy that will make the operating environment conducive to local manufacturers so as to facilitate private sector led economy growth.

According to him, the manufacturing sector is a huge job creating sector and should be supported instead of stifling them through unhealthy policies which indirectly affect the importers of finished products.

On the foreign exchange (forex) policy of the Federal Government, he claimed that the policy adversely affected the manufacturing sector as productivity in the sector contracted greatly last year.

He, however, praised what he called some noticeable modifications in the various presentations and recommendations by MAN.

He said the challenges felt in the economy might not be unconnected with the crash of crude oil prices in the international market, adding that as the forex situation improves, further modification of the policy should be undertaken.

On the discontinuance of allocating forex to Bureau de Change (BDCs), Jacobs asked that it should rather be dedicated to support the importation of raw materials and machinery that are not available locally to grow the manufacturing sector.

By Olisemeka Obeche

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