The Manufacturers Association of Nigeria (MAN) has identified seven advantages that the new electricity bill can bring to the manufacturing sector if effectively implemented. MAN stated that the bill has the potential to reduce alternative energy costs, boost Foreign Direct Investments and manufacturing performance, increase Internally Generated Revenue, improve infrastructure, and lighten the tax burden on manufacturers. Other benefits include more competitive and lower electricity tariffs, increased investment in renewable energy, backward integration, energy security, stable power supply, and proper planning.
MAN acknowledged the signing of the bill as a positive step towards the diversification and decentralization of the power sector, following the removal of subsidy. The association emphasized that empowering state governments and private investors, adopting renewable energy, and reforming the governance structure of the power sector can drive investment, improve electricity access, and stimulate economic growth. Nigeria's electricity supply shortage has been identified as obstructing the profitability of manufacturers, resulting in an annual economic loss of approximately N10.1 trillion or 2% of the country's GDP.
President Bola Tinubu recently assented to the electricity bill, which seeks to repeal the Electricity and Power Sector Reform Act, 2005, and replace it with the Electricity Act. The Act consolidates all legislations related to the electricity supply industry, providing an ideal institutional framework to guide the post-privatization phase of the Nigerian Electricity Supply Industry and encourage private sector investments. Its main objective is to establish a comprehensive legal and institutional framework for the Nigerian Electricity Supply Industry, allowing states, companies, and individuals to generate, transmit, and distribute electricity, thus de-monopolizing these functions at the national level.
Over the years, Nigeria's power sector has faced various challenges, including poor policy enforcement, over-regulation, gas supply instability, and transmission network issues, resulting in erratic electricity supply, frequent power outages, and grid collapses. These issues have hindered economic growth, and access to electricity remains a major challenge for millions of Nigerians. Nigeria currently has the largest number of people without access to electricity globally, with an estimated 86 million people lacking access. Manufacturers have been spending significant amounts on alternative energy, reaching N144.47 billion in 2022, highlighting the need for reliable power supply.
MAN suggests that to fully realize the potential benefits of the electricity Act, security infrastructure should be strengthened to create a conducive business environment. The association also recommends providing legal, financial, and technical support to state governments that have yet to establish electricity market laws, encouraging them to collaborate with existing agencies and operators in the power sector to avoid the costly construction of new power distribution networks that could undermine investment attractiveness.