President Tinubu’s Electricity Act 2023 Brings Hope of Palliative Measures for Manufacturers and Nigerians
In a significant move to address the longstanding challenges facing Nigeria’s power sector, President Bola Ahmed Tinubu has signed the Electricity Act 2023 into law. The Manufacturers Association of Nigeria (MAN) hails this landmark legislation as a potential palliative for its members and all Nigerians, provided it is effectively implemented.
Over the years, the Nigerian power sector has grappled with numerous hurdles in its electricity value chain. Poor policy enforcement, excessive regulation, gas supply instability, and transmission network bottlenecks have plagued the sector, resulting in erratic power supply, frequent outages, and persistent grid collapses. These issues have significantly hindered the nation’s economic growth.
For manufacturers, the inadequate electricity supply has been particularly detrimental, causing an annual economic loss estimated at around N10.1 trillion or two percent of the country’s Gross Domestic Product (GDP). The dire situation has compelled manufacturers to spend substantial amounts on alternative energy sources, with expenses rising from N77.21 billion in 2021 to N144.47 billion in 2022.
The recently enacted Electricity Act 2023 offers a glimmer of hope for resolving these challenges and reducing the cost of alternative energy. The Act is expected to address the constraints within the power sector and usher in a period of healthy price competition between states and private investors, thereby leading to cost-reflective electricity tariffs.
The introduction of cost-reflective tariffs has been a longstanding demand by MAN, aiming to prevent the exploitation of its members. The association believes that this new legislation aligns perfectly with their goals and could attract manufacturing Foreign Direct Investment (FDI), enhance sector performance, and bolster the sector’s contribution to the economy. Furthermore, the Act is predicted to boost Internally Generated Revenue (IGR), promote investment in renewable energy, improve infrastructure, ensure stable power supply, and alleviate the tax burden on manufacturers.
One significant aspect of the Act is the provision to empower private manufacturing companies to generate electricity. This move is anticipated to unlock substantial investments in backward integration activities, which play a crucial role in ensuring energy security within the sector.
However, while welcoming the enactment of the Electricity Act 2023, the MAN urges the government to consider its recommendations to maximize the benefits. The association emphasizes the need for robust security infrastructure to create a favorable investment climate, as no investor would want to operate in an insecure economy. Additionally, it calls on the government to provide legal, financial, and technical support to state governments that have yet to establish electricity market laws. Collaboration between state governments, existing agencies, and power sector operators is also vital to avoid the exorbitant costs associated with building new power distribution networks.
The success of the Electricity Act 2023 largely hinges on its effective implementation. To ensure this, it is crucial for the new President to appoint a committed and incorruptible Minister of Power with a broad understanding of the power sector’s operations and intricacies.
With the signing of this groundbreaking legislation, President Tinubu’s Electricity Act 2023 holds the promise of delivering much-needed relief to manufacturers and Nigerians, paving the way for a revitalized power sector that fuels economic growth and prosperity.
Source: Daily Post
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