Impact of Energy on the Manufacturing Sector in Nigeria
SECTION ONE 1.1 INTRODUCTION One of the pre-requisites of manufacturing is abundance of energy i.e. electricity which is mainly utilized for driving machines for the production of various items.
The manufacturing sector has always emphasized in their public policy advocacy, the need to improve various infrastructure, particularly, electricity which is the primary energy required for production.
The uncompetitiveness of goods produced in Nigeria is largely due to the fact that apart from other facets of the economy which affect the manufacturing environment, electricity has been a largely contributing factor especially the running cost of private generators, rather than diminishing is increasing in leaps and bounds.
The main thrust has been on the cost of spare parts for maintenance of generators and the rising cost of AGO (Diesel).
Industry uses more than 10percent of the energy consumed in the Nigeria (figure 1) - and even more when product transportation is factored in. The escalating costs for natural gas and oil clearly have a major impact for manufacturers in Nigeria that, left unaddressed, could hurt their competitiveness in world markets. Moreover, energy experts predict that global market pressures on oil and gas markets will ensure that high prices will be with us for some time. Being better energy managers is important not only for each company, but is also an essential component in achieving a low-inflation, high-growth economy.
One of the major findings of this report is that the rising costs for energy also offer opportunities for manufacturers. By strategically building energy efficiency decision-making into production, manufacturers will identify new ways to—
• cut costs, raise productivity, and improve shareholder value • improve managerial performance • meet environmental standards • create energy efficient products and market opportunities • improve their competitive position and • ensure better community relations. 1.2
The manufacturing sector has always emphasized in their public policy advocacy, the need to improve various infrastructure, particularly, electricity which is the primary energy required for production.
The uncompetitiveness of goods produced in Nigeria is largely due to the fact that apart from other facets of the economy which affect the manufacturing environment, electricity has been a largely contributing factor especially the running cost of private generators, rather than diminishing is increasing in leaps and bounds.
The main thrust has been on the cost of spare parts for maintenance of generators and the rising cost of AGO (Diesel).
Industry uses more than 10percent of the energy consumed in the Nigeria (figure 1) - and even more when product transportation is factored in. The escalating costs for natural gas and oil clearly have a major impact for manufacturers in Nigeria that, left unaddressed, could hurt their competitiveness in world markets. Moreover, energy experts predict that global market pressures on oil and gas markets will ensure that high prices will be with us for some time. Being better energy managers is important not only for each company, but is also an essential component in achieving a low-inflation, high-growth economy.
One of the major findings of this report is that the rising costs for energy also offer opportunities for manufacturers. By strategically building energy efficiency decision-making into production, manufacturers will identify new ways to—
• cut costs, raise productivity, and improve shareholder value • improve managerial performance • meet environmental standards • create energy efficient products and market opportunities • improve their competitive position and • ensure better community relations. 1.2
References: http://www.fypower.org/pdf/Mfg_NAM_ASE.pdf. http://www.eia.doe.gov/emeu/mecs/mecs94/ei/ei_1.html Central Bank Nigeria, (2001) “the changing structure of the Nigerian economy"