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Why  reform in Nigeria’s energy sector inevitable – MAN


By Divine Nwaoguji – Nweke

The Manufacturers Association of Nigeria (MAN) has called on those opposing ongoing reforms in the country’s entire energy sector, to consider the negative impact of subsidy regime had had on the national economy as well as private businesses.

According to its President, Egr. Manur Ahme said that what is required at this point is for the legislature to be proactive by formulating and implementing policies to facilitate sustainability as business operators grapple with the devastating impact of the COVID-19 pandemic.

Ahme, who  gave the advice at a press conference on the state of the economy, recently  in Lagos, said such policies must support businesses, protect jobs, preserve investment and foster economic competitiveness at both national and subnational levels.

He said that the Chamber endorsed the adoption of the cost reflective tariff regime in the power sector, while noting the push back by the labour unions on the policy.

The MAN president said that the cost tariff regime was inevitable to attract investment and improve power supply, though safeguards were needed to protect consumers from exploitation.

“If the economics of the investment is not right, investors will not inject capital into the sector.

“However, there should be safeguards to protect consumers from exploitation.

“There should comprehensive metering of consumers and there should be value for money.

“We believe that policy should be given a chance,” she said.

He said that the Solar Home Initiative, aimed at expanding energy access to 25 million individuals through the provision of solar home systems or connection to a mini grid, was a step in the right direction.

He said that the initiative would stimulate growth and productivity in the country’s rural economy.

He commended government on the recent reforms implemented in the downstream segment of the oil sector.

He said the removal of subsidy on Premium Motor Spirit and the proposal of the Nigerian National Petroleum Corporation (NNPC) to give up majority stakes in the four local refineries were laudable.

Ahem, however, appealed for the provision of mass transit buses, development of rail system for intra city and intercity transportation, and the acceleration of the auto gas programme so that more vehicles could be powered by gas.

“We believe these measures are steps in the right direction in rescuing the economy from deepening fiscal crisis.

“We note that the subsidy regime had for long constituted a huge burden on public finances, encouraged corruption, inefficiencies, deterred investment flows, and weakened the earnings performance of oil refining and marketing companies.

“We acknowledge the effect of the price hike on the vulnerable segments of the society, accordingly, we request that palliatives be provided in form of mass transit buses among other initiatives to ease the burden on consumers,” she said.

He also called for the expeditious passage of the Petroleum Industry Bill (PIB) to consolidate recent reforms in the sector.

On the various fiscal and monetary interventions by the government, Mabogunje said the schemes would help with fulfilling payroll obligations and help protect the jobs within the SMEs sphere.

He, however, said that special attention be given to sectors severely impacted by the pandemic.

“MAN acknowledges the various interventions of the fiscal and monetary sides of authorities in mitigating the adverse impact of the pandemic on economic and business environment.

“The federal and state governments need to expeditiously redirect attention to these sectors including aviation, hospitality, entertainment, and manufacturing.

“This has become necessary to protect jobs, preserve investments and provide the much-needed liquidity required to revive these sectors,” she said.

The MAN president said the chamber noted the weak performance of the economy at sectoral level, particularly among key sectors with potential to drive economic diversification.

She said that the 6.1 per cent contraction of the Gross Domestic Product (GDP) in the second quarter reflected the  profound impact of the pandemic on the economy.

He said the Chamber anticipated a marginal improvement in GDP growth performance by the third quarter.

He attributed the anticipated improvement to the declining trend in the rate of confirmed cases of COVID-19, relaxation of various containment measures and the increasing tempo of economic activities.

On the nation’s accelerated inflation rate, the MAN president said the persistent pressure on consumer prices stemmed largely from the sustained uptrend in food inflation.

He said that the recent incidents of flooding in key food-producing states in the North had wiped off food and cash crops on a large scale and disrupted output projections in agriculture.

He said that the situation, if not expeditiously addressed and managed, would escalate the pressure on food prices, thereby putting the country on the verge of a food crisis.

He stressed the importance for fiscal authorities to work toward developing a multimodal transport system to reduce logistics costs and improve efficiency in conveyance of food commodities from farms to markets.

“According to local media reports, over two million tons of rice were lost to flood; other crops such as sorghum, corn and millet were also affected.

“Rising inflation trajectory has serious implications for businesses regarding production cost, investment real return rate, and overall economic performance.

“Looking forward, the MAN expects inflation to sustain its upward trajectory for the rest of the year.

“He calls on the fiscal and monetary authorities on the need to synergize to moderate domestic prices to a level conducive for sustainable and inclusive economic growth.

“The Federal Government might need to reopen the land borders to give succour to food prices in the light of lower domestic food supply amid huge demand for food.

“imilarly, both the Federal and State Governments also need to promptly address the issue of food wastage, majorly responsible for the food supply gap being experienced in the country.

“Government intervention and private sector investments are needed to enhance mechanization as well as storage to minimize post-harvest losses,” he said.


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