Manufacturers Hail Tinubu’s Signing of Electricity Act 2023

*Says policy will boost FDI, profitability

Dike Onwuamaeze

The Manufacturers Association of Nigeria (MAN) has commended the signing of the Electricity Act 2023 by President Bola Ahmed Tinubu, describing it as a major step that would boost the inflow of foreign direct investment (FDI) in the country’s manufacturing sector.

MAN gave the commendation yesterday, in a statement titled: “Position of the Manufacturers Association of Nigeria on the Electricity Act 2023,” obtained by THISDAY.

It stated that, “the new Act adequately addresses the challenges in the power sector, and we are quite optimistic that such development will encourage the inflow of manufacturing FDI, boost the performance of the sector and increase the sectorial contribution to the economy.”

It also added that, “in light of the huge energy deficit occasioned by the age-long challenges in the power sector, newly inaugurated President Tinubu’s administration has set the ball rolling by signing the Electricity Act 2023, which is meant to be a game changer to address the numerous constraints within the sector.

“The assent of the Electricity Act 2023 on June 9 is a more crucial milestone for the operations in the power sector, sequel to the constitutional amendment signed during the last days of the former President Muhammadu Buhari-led administration which allows states to generate, transmit and distribute their own electricity.”

MAN noted that with the replacement of the Electricity and Power Sector Reforms Act 2005, the Electricity Act 2023, was aimed at providing an all-inclusive framework which would serve as a guide to the decentralisation of the power sector in order to encourage private investment and build a competitive electricity market.

The association further stated the new electricity law would enhance the state governments’ internally generated revenue (IGR), improved infrastructure and lessen the tax burden on the manufacturers.

It stated: “Nigeria’s electricity market is one of the biggest in the world because of its massive population and growing demand for energy by households and businesses.

“Therefore, the amount of IGR that each state stands to accrue from the decentralisation of the power sector is delightful. If properly utilised, such huge revenue can bridge the infrastructure deficits in many states without imposing further tax burden on manufacturers.”

The association was also optimistic that the new Act would also open greater investment opportunities in renewable energy and promote cleaner environment, improve manufacturers’ profit margin and enhance backward integration and Nigeria’s energy security.

“For manufacturers, investment in renewables like solar will not only promote cleaner climatic environment but ensure that energy consumption is cost efficient. The cost savings will directly improve profit margin and promote further manufacturing investments.  

“Energy is the most vital input of manufacturers. The empowerment of private manufacturing companies to generate their own electricity will unleash massive investment in backward integration activities, which will no doubt be a major enabler of energy security within the sector,” MAN added.

It noted that the country’s epileptic power supply often destabilises daily business plans of many of its small and medium members that could not afford or maintain alternative sources of energy.

“A distorted business plan can be highly detrimental for manufacturing operations. Apart from causing sub-optimal capacity utilisation, the amount of wastage can be highly unbearable.

“The new Act, if fully implemented, can re-write the story by stabilising the supply of electricity to infant manufactures and aid their planning for optimal delivery,” it added.

The association ranked the signing of the Electricity Act 2023 as the second decisive major step of the new Tinubu’s administration to take the Nigerian economy on the right direction.

“Following the removal of subsidy, this is another reflection of the boldness and commitment of the new administration towards the diversification and decentralisation of the power sector.

“The empowerment of the state governments and private investors, the adoption of renewable energy and the reformation of the governance structure of the power sector are capable of driving investment, improving electricity access and fostering economic growth.”

However, the following recommendations must be considered to avoid truncating the potential benefits of the Electricity Act: