The Electricity Act 2023, signed into law by President Bola Tinubu, is expected to have a positive impact on Nigeria’s manufacturing sector.
The Act aims to address the longstanding issues in the Nigerian power sector, which have hindered economic growth and development.
The Manufacturers Association of Nigeria (MAN) recognizes the potential of the Electricity Act 2023 to be a game-changer for the manufacturing sector.
The Director General of MAN, Mr Segun Ajayi-Kadir, highlights the challenges faced by the power sector in the past, including poor policy enforcement, over-regulation, instability of gas supply, and transmission network bottlenecks.
These problems have resulted in erratic electricity supply, frequent power outages, and collapses of the national grid, all of which have hindered the growth of the economy.
The inadequate electricity supply in Nigeria has been a major obstacle for manufacturers, leading to significant economic losses.
Manufacturers have been compelled to spend a substantial amount on alternative energy sources, which has negatively impacted their profitability.
However, the newly signed Electricity Act 2023 is expected to address these constraints and reduce the cost of alternative energy.
The Act introduces cost-reflective electricity tariffs, which will promote healthy price competition between states and private investors. By addressing the challenges in the power sector, the Act is expected to encourage the inflow of manufacturing Foreign Direct Investment (FDI) and increase the sector’s contribution to the economy.
It is anticipated that the Act will boost Internally Generated Revenue (IGR), stimulate investment in renewable energy, improve infrastructure, ensure more stable power supply, and alleviate the tax burden on manufacturers.
Furthermore, empowering private manufacturing companies to generate their own electricity will encourage investment in backward integration activities, enhancing energy security within the sector.
To maximize the benefits of the Electricity Act 2023, the MAN DG suggests that the government consider their recommendations.
These recommendations include strengthening the security infrastructure to create a conducive environment for investors, providing legal, financial, and technical support to state governments in establishing electricity market laws, and promoting partnerships between state governments and existing agencies and operators in the power sector.
The effective implementation of the Act is also emphasized, calling for the appointment of a committed and experienced Minister of Power.
