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Nigerian Manufacturers Abandons Discos For Poor Quality Service

Nigerian Manufacturers Abandons Discos For Poor Quality Service
June 23
18:56 2017

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Nigerian manufacturers are increasingly abandoning power distribution companies popularly called DisCos, for private companies that can provide 24-hour incremental and quality electricity at cheaper rates.

Manufacturers say they are toeing this line on account of the poor quality of power supply they get from DisCos, which tend to disrupt production activities at factories across the country.

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Already, the Manufacturers Association of Nigeria (MAN), through its recently formed MAN Power Development Company, has signed an agreement with Tower Energy Solution & Systems Limited for the supply of between 6 to 10 megawatts (MW) of electricity to Henry Carr Industrial Cluster, Ikeja, Lagos.

MAN is on the verge of agreeing with Negris Group for the supply of up to 80MW of electricity to Odogunyan in Ikorodu industrial cluster.

The organisation is also talking with solar power supply firms in norther Nigeria, where there is limited gas supply to enable clusters in Kaduna, Kano and other parts of the north to have incremental power at cheaper rates. Similarly, a negotiation is in the pipeline with Sahara Energy, Geogrid LighTec Limited and other companies for the supply of power to industrial clusters, according to Ibrahim Usman, chairman of MAN Power Development Company Limited.

“Right now, manufacturers would rather pay a little extra and get quality power,” Usman said in Lagos.

“The particular case works in Lagos because there is gas. We have Tower that is already producing 35MW and it is ready to deploy more on incremental basis. If we are going to the north, where there is no gas, we will be talking of solar, biomass, wind or hydro. It is a case by case basis because what is happening in Lagos may not necessarily be what we need in Uyo, Aba, Kano, or Kaduna,” he said.

Nigerian manufacturers are hard-hit by poor power supply, which gulps 40% of their expenditure. They spend N25 billion in 2014 and N59 billion in 2015 on power, including alternative sources such as USP and inverters, according to MAN. Small and medium manufacturers use diesel and petrol but large enterprises have gas plants and use Low-Pour Fuel Oil (LPFO) which is expensive.

Dangote Cement is installing a coal-fired plant, while Ashaka Cement is already on coal.

“The idea is to be able to put manufacturers together in clusters and arrange for power, which can be supplied through providers that will engage in power supply through hydro, solar, gas and will remove the cost of manufacturers getting involved in producing their own power,” said Reginald Odia, chairman of the Economic Policy Committee of MAN and director of the MAN Power Development Company.

“You need to run your plants and those plants need energy,” Odia added, after a presentation by Negris Group for the supply of up to 80MW to Odogunyan in the Ikorodu industrial cluster.

The Phase 1a of Negris Group’s power supply will inject 10MW into Ikeja Disco’s substation and targets 33MW double current grid within six months. The Phase 1b of the arrangement involves upgrading capacity by 2×35 MW to achieve 70 MW within 18 months, while the second phase will add more capacity to the turbines to hit 140 MW in 24 months.

Manufacturers will bear a capacity charge, which depends on the net dependable capacity of a power plant and contractual capacity. They will also bear a distribution change cost and a fuel charge based on the current gas price.

“For commercial rate, per square metre of gas is about $7.8, but we are pushing to get gas at a cheaper rate. Gas is still being charged in dollars, so charges here depend on the exchange rate. If gas is cheaper or charged in naira, cost of power will be less,” said Sobanwa Kunle, general manager of Negris.

According to Wole Ayoola, president of Negris, the company was desirous of playing its own part to make Nigeria self-sufficient.

“Our power is relatively cheaper than self-generation. In self-generation you have to think about spare parts; you have to think about operation and general wear and tear and you have to replace equipment. But in this case, if you are a manufacturer that makes paper, you are not in the business of generating power but making paper. Rather than having a team of power engineers, in the long run if you have a number of people that come together and take the headache away from you and enable you focus on the ones that generate money for you,” Ayoola said.

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David Christopher

David Christopher

David Chris is a writer and a staff at Ngyab.com. An internet guru. He like reading and having fun

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