26 October 2009

Abuja — The much-awaited impro-ved power supply - for which a target of 6000mw was set for December by the Federal Government - will be mainly to the benefit of the manufacturing sector, according to the Minister of State for Commerce and Industries, Mr. Humphrey Abah.

According to the plan unveiled by the minister in an interview with THISDAY, the manufacturing sector would top the priority list of power supply, in line with a proposal which had already received the blessing of the Ministry of Power.

Ultimately, the manufacturing sector would enjoy uninterrupted power supply, Abah said.

A recent report showed that Nigerians spend about N796.4 billion on fuel to generate their own power every year, with industries operating under the aegis of Manufacturers Association of Nigeria (MAN) spending over N350 billion of the sum to fuel their power plants.

A breakdown shows that N540.9 billion is used to buy diesel and N255.5 billion goes into the purchase of petrol annually.

Abah said the idea of putting the manufacturing sector at the top of the priority list is to address one of the critical cost components of manufacturers in the country, which had led to the closure of a number of companies in the past.

Abah stated that he had received the audited power needs of the key manufacturing companies in the country grouped in clusters and obtained from the president of MAN.

The essence, the minister said, was to use the profile in the next phase of his ministry's discussions with the Ministry of Power to source bulk energy to deliver to industrial layouts so that they could have uninterrupted power supply.

"Energy is being addressed by the Federal Government as you are aware. The president has said it several times and I do know that by the grace of God, the 6,000mw will be met by the end of the year. We are in talks with the Ministry of Power and the Minister has assured me of his ministry's readiness to partner with us.

"I received only yesterday upon request from the president of MAN an audit profile of the power needs of our industrial clusters across the nation and the essence is to use that profile in the next phase of our discussion with the Ministry of Power so that we can source bulk energy and deliver to industrial layouts so that they can have uninterrupted power supply.

"We recognise that power is an essential cost component that is distorting the cost of production i.e. making production uncompetitive for Nigerian industrialists and manufacturers at present," Abah said.

The minister, who estimated that power constitutes about 35 to 40 per cent of production costs in the country as against the industrialised countries' average of about 10 to 15 per cent on the maximum, added: "We want to be in a position to assist producers/industrialists to remove that cost element from their productive bills."

He further stated that once "we can achieve that, we will help to make their products competitive and the savings they make from there can go into improving on the quality of their products".

This, according to Abah, "is because quality is one issue we have discussed with them and once we achieve the delivery of power to them and improve in other infrastructures like roads and rail transport and they can also be in a position to invest in further research and development to bring their goods to competitive quality standards with similar products anywhere in the world".

The minister also addressed the issue of uncontrolled imports from the industrialised countries, saying: "I think the proper thing to address is the issue of cost of local production because once we can achieve effective cost management in their unit cost of production, we can then put them in a scale to enable them compete internationally."

He noted that "once Nigerian manufacturers have a common platform for production with their peers elsewhere in the world and we have an inherent advantage in terms of the source of materials that is with us and labour. These are advantages people elsewhere might not have access to. So, we can leverage on those advantages and compete internationally.

"The first issue to address for the productive sector of our economy is infrastructure because once we can get the infrastructures right for them, then they will be in a position to compete globally. You are aware that we are members of the WTO and that within the ambits and provisions of the WTO rules there are certain things we cannot do by legislations so that we do not infringe on the treaties we have consented to. So, we expect that the way out of it is to make them to be competitive and the way to make them to be competitive is to leverage on the cost of production and bring the cost down."

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