A Review of the Nigerian Energy Industry

Steel manufacturers lament hike in electricity tariff

Oscarline Onwuemenyi 26 February 2015, Sweetcrude, Abuja – The Steel Manufacturing Group of the Manufacturers Association of Nigeria (MAN) yesterday threatened to shut down operations in the face of persistent hike in electricity tariff without commensurate increase in power supply, even as it lamented that the hike in electricity tariff has crippled many steel companies in the country.
The Chairman of the MAN Steel Manufacturing Group, Sunil Goel, who stated this at a presentation during a stakeholders’ meeting organized by the Nigerian Electricity Regulatory Commission (NERC), urged the commission to revert to the previous order that was scheduled to run till 2017.
Goel said, “We want to reiterate the following obvious facts and the impacts of the new hike on electricity tariff on our production and its adverse effects on our planned long term projections which were actually based on MYTO 2012-2017 tariff order.”
He said the five-year plan of the 2012 – 2017 MYTO actually formed the basis for the industries and manufacturers’ long term plan which is being disrupted by the current MYTO review, adding that, “As we are not informed of the revocation of the MYTO order, we consider your sudden action unfair to our members.”
Goel said the increase between 44% and 45% was too astronomical and has only served to make life difficult for its members.
According to him, “The market/consumers will not be able to absorb any increase as the market is already saturated.”
The group said the steel industries are presently operating on a low profit margin of less than N1 per kilogramme, and that cannot sustain a N7 – N8 differential prices amongst competing companies; they appealed to NERC to approve a uniform tariff for all steel manufacturers in Nigeria regardless of their location to harmonise the system.
Meanwhile, the Director General of the Budget Office of the Federation, Bright Okogu also lamented the sudden increase in electricity bills, saying the office since 2013, had N700,000 to less than N1million bills monthly, only for the bill of September 2014 to read N3.3 million.
Okogu said the bill had risen to N7.6million by January 2015 adding that, “This was attributed to increase in electricity tariff from N22 to N35. This explanation is not tenable as the increase is 59% which should not result in 100% increase as indicated in the bill.”
In his response, NERC Chairman, Dr. Sam Amadi said the regulator had advertised the review processes many time in radios, its website and newspapers.
He said that if power from the national 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.”
On the MYTO structure, he explained that it helps to provide clarity as to how prudent costs are recovered by efficient operators. The Electric Power Sector Reform Act (EPSRA) 2005 obligates NERC to ensure that every efficient operator recovers prudent costs of producing and supply electricity. At the same time we are also obligated to ensure that tariffs are fair, reasonable and affordable.”

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