Nigerian Manufacturers Face Mounting Challenges Amid Rising Electricity Tariffs

The manufacturing sector in Nigeria is facing significant challenges due to the escalating costs of energy, which have driven up production and logistics costs. Manufacturers have raised concerns about the detrimental impact of rising energy prices, with petrol prices increasing by approximately 430% and electricity tariffs rising by 212% for ‘Band A’ consumers in the past year.

In April 2024, the Nigerian Electricity Regulatory Commission (NERC) approved an increase in electricity tariffs for customers under the Band A classification. This decision sparked strong opposition from the Manufacturers Association of Nigeria (MAN), who filed a legal challenge against NERC and the electricity distribution companies (DisCos).

MAN argued that the tariff increase was implemented without following due process and violated regulatory requirements. The organization sought four reliefs:

1. Non-Compliance with Due Process: MAN claimed that NERC did not fulfill the stated due process requirements before approving the tariff review.
2. Non-Compliance with Regulatory Requirements: MAN argued that NERC failed to adhere to the necessary regulatory procedures for tariff reviews.
3. Discrimination Against Band A Consumers: MAN contended that placing the burden of the tariff increase solely on Band A feeders was discriminatory and unfair.
4. Compliance with Administrative Procedures: MAN demanded that NERC comply with the administrative procedures for tariff review before implementing the April and May Supplementary Orders.

NERC, however, objected to MAN’s suit, claiming that it constituted an abuse of court processes and was filed prematurely without following due process.

In a significant setback for manufacturers, the court struck out MAN’s case on October 7, 2024, ruling that the suit was an abuse of court process and had not adhered to the provisions of section 51 of the Electricity Act 2023.

The rising cost of electricity continues to pose a major challenge for the manufacturing sector in Nigeria, impacting production costs and ultimately affecting the competitiveness of Nigerian-made goods.