The Manufacturers Association of Nigeria (MAN) has raised Concerns about the potential consequences of Implementing the proposed Increase in Electricity tariffs by Power distribution companies, Warning that it may prompt Multinational Companies to Relocate their Factories outside of Nigeria.
MAN President, Francis Meshioye, expressed these concerns during a press briefing, highlighting that some International Manufacturing Firms have already left the Country due to the challenging Operating Environment, particularly the Electricity crisis.
He emphasized that any further Tariff hike would likely result in a Mass exodus of Companies.
Meshioye called on the Government to reconsider the decision.
It should be noted that several Electricity Distribution Companies (DisCos) had previously announced plans to raise Electricity tariffs by approximately 30 to 40 percent for specific Consumer Categories, starting from July 1, 2023.
However, they have since Withdrawn the Announcement, stating that approval from the Nigerian Electricity Regulatory Commission (NERC) is still pending.
Meshioye explained that Energy Costs Constitute a Significant portion of Manufacturers’ Expenses and reducing this Cost would greatly benefit both Manufacturers and the general Population.
He emphasized that the High Energy Cost, combined with other Challenges, has already compelled some Manufacturers, particularly International Businesses, to Relocate their Operations to other Countries.
In addition to the Power Issue, Meshioye identified other Factors that could contribute to Manufacturers Exiting Nigeria, Including the unpredictability of the Foreign Exchange rate and challenges related to Forex availability.
These problems, he stated, Significantly affect Manufacturers’ Business Models.
Overall, the potential Relocation of Factories and the associated challenges with Electricity Tariffs, Foreign Exchange rates, and Forex availability pose Significant concerns for the Manufacturing Sector in Nigeria.
