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Tag: manufacturers

  • Don to manufacturers: up your game

    A professor of Analytical Chemistry, University of Uyo, Akwa Ibom State, Professor Anthony Paul Udoh, has called on manufacturers to place more emphasis on sample preparation in their quest to manufacture goods for the public.

    Prof. Udoh gave this admonition while delivering his inaugural lecture at the University of Uyo recently.

    The don who spoke on the theme: ‘The Covenanted Chemist’ said sample preparation is the most important step in chemical analysis because it determines to a large extent, the kind of result expected or obtained.

    Prof Udoh who has over 37 publications in both national and international journals, is currently a member of the Chemical Society of Nigeria and former Dean, postgraduate School, UNIUYO.

    The chemist whose works on crude oil standardisation procedures has helped to solve problems that were unsolved for decades in the oil industry, said buildings, structures and historical monuments corrode easily and fall into disuse quicker than the years they were expected to last.

    According to him, climate change worldwide has caused a number of harmful effects apart from ozone layer depletion thus has resulted in highly heated earth environment.

    He added that the world may be facing serious crisis over frequent corrosion of steel and aluminum if the problems are not addressed on time.

    “It is known that there are climate changes the world over. These changes in climate have resulted in a number of harmful effects,” he said, adding: “Apart from ozone layer depletion resulting in highly heated earth environment, corrosion of historical monuments, structures and buildings is very worrisome.”

    The professor of analytical chemistry, who has designed solution against corrosion of the metals, stated that environmental degradation has been a matter of serious concern to engineers, chemists, and other scientists, adding that scientists have made efforts to develop ameliorating conditions for the phenomenon.

    Besides, Udoh warned that agricultural wastes should be adequately harnessed as they can be useful raw materials for industries.

    “Agricultural wastes are the materials that are left after we have processed agricultural materials for human benefit. Such wastes include plantain husk, peels from plantain, the fingers and stem from palm fruit bunches, among others.

  • Manufacturers, others laud Buhari on improved power supply

    Manufacturers, others laud Buhari on improved power supply

    •Seek privatisation of Transmission Company

    Manufacturers acting under the aegis of Manufacturers Association of Nigeria (MAN), commercial and residential consumers of electricity, have praised President Muhammadu Buhari  over  current improvement in power supply in the country. They urged the government to sustain the tempo and improve on it.

    Major consumers of electricity in the country including the industrial, commercial and residential customers that spoke with The Nation lauded the improvment, saying it will lead to job creation.

    The manufacturers that fall under the industrial or maximum demand customers consume the greatest volume of electricity. At the time of very low generation and supply that category of consumers depended solely on generators.

    President of MAN, Dr Frank Jacobs confirmed that power supply has really improved. He told The Nation that his members are excited over the development, and urged President Buhari to sustain and improve the supply.

    He said: “Most of our members that I spoke to on this issue confirmed that there has been significant improvement in electricity supply unlike in the past when we may not have electricity for some days.

    “I will like to advise the government not to relax as much is needed to be done. Government should ensure that there is adequate supply of gas, and at very affordable price. This will go a long way to help stabilise the improvement we are witnessing now.

    “The Federal Government should also privatise the Transmission Company of Nigeria (TCN). This will not only help to fully achieve the goals of privatisation but also help the private firms to invest in that segment of power supply value chain. With the investment from the private sector, the transmission network will be expanded speedily and the problem of system collapses will be drastically reduced.

    “The control of the transmission arm of the power sector by the government is slowing down the attainment of the privatisation goals because of the bureaucratic bottlenecks associated with running public owned and controlled organisations.”

    The Director-General, Nigeria Textile Manufacturers Association (NTMA), Mr. Jaiyeola Olarewaju said power supply has improved but added that much is still required to make the desired impact.

    He said: “Power has improved but not up to 30-40 per cent of our requirement. About 70-80 per cent of the power we use ought to come from the national grid, so we still heavily depend on generators.

    “Even though supply has improved in some places but we still cannot give them pas mark. The Federal Government shouldn’t relent on its efforts to supply adequate supply to the industrial sector. Government should also look at the private companies that bought the successor companies of the defunct Power Holding Company of Nigeria (PHCN). The investors whose companies are not doing the right thing should forefeit their licences.”

    Some artisans including welders, hair dressers, barbing salon operators at Berger and Ikeja in Lagos who spoke to The Nation also confirmed that supply has improved and has boosted their business. Operators  of cold rooms at Ijora and Oshodi said the hours of supply has improved but they still complement with their personal generators.

    The increase in generation at Egbin Power plant is responsible for the huge improvement witnessed in Lagos State and its environs. The power plant a few months ago, was generating below 500 megawatts (Mw) but currently it generates over 1050Mw.

    The Chairman, Egbin Power Plc, Mr. Kola Adesina said the improvement being witnessed is part of the benefits and success of the privatisation process and power sector reform in Nigeria. He attributed the achievement partly to the direct intervention of the Federal Government in its determination to resolve the power crisis, which has resulted in recent improvement in gas supply.

    “This is driving the increase in power supply in the nation, boosting socio-economic development. Prior to this, we had invested heavily and had the plant ready to generate power at full capacity but there was no gas to do so. This is indeed a good development for the power sector in Nigeria,” he said. He commended the government for the intervention in the gas situation that has impacted on power generation positively, and called for more dynamic policies and incentives for sustainable gas supply across the nation.

    Its Chief Executive Officer, Dallas Peavey said the transformation in Egbin commenced following its acquisition by Kepco Energy Resource Limited (KERL), in collaboration with its technical partners, Korea Electric Power Corporation (KEPCO).

  • Local meter manufacturers seek govt’s intervention

    The Electricity Meters Manufacturers Association of Nigeria (EMMAN) has called on the Federal Government to assist its members’ firms from folding up.

    He said some of the firms might go under for lack of patronage by the privatised power companies.

    Its Executive Secretary, Mr. Muideen Adebayo Ibrahim, told The Nation that despite the huge loans his colleagues took from banks to build the meter manufacturing factories, the electricity distribution companies  (DISCOS) have refused to buy meters from them. The situation has forced some of their members to close shops, while others drastically cut their workforce, he decried.

    He said: “Our members out of sheer patriotism, despite numerous challenges confronting manufacturers in Nigeria, took undaunted risks with borrowed funds with the accompanying high interest rates, established world-class factories with state-of-the-art facilities.

    “Every local manufacturer has production capacity of 1.2 million meters per annum with room for future expansion. Not only that, smart meters (single and three-phase) are produced with GPRS data bundle that allows for communication between the meter and the server.

    “Our members have robust billing application system, energy theft accounting system, automatic metering infrastructure, superlative customer relationship management system platform, prompt after sales service and asset management mechanism, among others.

    “In fact, some of the billing application system or platforms designed by our members are currently being used by some of the distribution companies. This actually laid credence to the fact that the local meter manufacturers can do it, even if not better. But they have been faced with plethora of challenges in the past, which became more serious within the last one and half years, especially since the new owners of the distribution companies took over.

    “In fact, without mincing words, it has been very tough for our members, hence some have downsized their workforce and others shut down factories. Currently, one of the financiers threatened to dispose the factory of one of our members for his inability to service his obligation. It is, indeed, a sad commentary because we are running from pillar to post in order to ameliorate the situation.”

    As a result of the enormous challenges facing them, the EMMAN scribe urged the Federal Government to declare a state of emergency in the sector, create and make available a special intervention fund where local electricity meter manufacturers should draw soft loans at a maximum of two per cent interest rate. With such loans, locally produced meters can be sold to the distribution companies (DisCos) at very competitive price just as their counterparts from China sell to the DISCOS  on one year moratorium and five per cent interest, he said.

    He also asked the government to prevail on all the DISCOS to patronise locally produced electricity meters to create more jobs for Nigerians, increase its contribution to the Gross Domestic Product (GDP), which would on the long run boost the yearly revenue earnings of Nigeria and curb capital flight, among others. The government should support and encourage EMMAN members as the Chinese Government gave unflinching support to their counterparts in China, he added.

    Other requests by the local meter manufacturers include providing them (manufacturers) with the necessary infrastructure and facilities because some of the manufacturers rely on generating sets to operate, prevail on the DISCOS to stop estimated billing, and let the    Nigerian Electricity Regulatory Commission (NERC) step up and perform its oversight functions and responsibilities effectively and efficiently without bias or sentiment. NERC should apply the necessary sanction to any errant firm if need be, and ensure that the provision of Local Content Act on power sector is obeyed to the letter, he said.

    “Government should place embargo on the importation of meters in order to encourage local meter manufacturers, just as it was recently done in the automotive sector, protect the local manufacturers just as done in Egypt, Algeria, Tunisia, Morocco and South Africa, allow local manufacturers to sell meters to consumers and/or approved vendors in order to open up the market, and mandate all the local meter manufacturers to roll out at least 200,000 units of meters monthly.

    ‘’This will keep the factories running and more Nigerians would be gainfully employed. Rather than allowing the DisCos to buy from Chinese companies, which means developing China at the expense of our dear nation. NERC and Ministry of Industry, Trade and Investment should act as the supervisory bodies in this regard.

    “We will like to recommend the constitution of a monitoring committee for the DisCos and the manufacturers. The committee should comprise of representatives from; NERC, DisCos, EMMAN, Standard Organisation of Nigeria (SON), EMS, Ministry of Industry, Trade and Investment and Ministry of Power. This will ensure that things move on in the right direction which in the long run will propel the economy and this would no doubt enable more jobs to be created for the teeming unemployed,’’ he added.

  • Manufacturers urged to improve on products

    Manufacturers urged to improve on products

    The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has urged  manufacturers to improve on their products.

    In a statement in Lagos,  NACCIMA Director-General (DG) Mr. Emmanuel Cobham, said improved products would help the sector.

    Cobham said good products would guarantee efficiency of their operations, societal benefit and development of the economy.

    “If products can be made to standout, the customers will appreciate it because the customers like good quality products, he said, adding that most customers are willing to pay the difference to get value for their money in the goods they purchase.

    According to him, if Nigeria prides herself as being a big economy and a key player in the world, it is expected that products from the country should meet international standards.’

    He said almost two million new cars were sold every month in China, despite its economic slowdown and the demand for China cars was also strong in Europe.

    “There was a time when the world depended on German and Japanese products, but from this figure, it shows that China has been able to perfect its act. They did it to show others that it is feasible and this is good for their economy.

    “What is Dubai trading in? Honesty, top standard production and they make sure that only the best comes in. Things like religion and sentiment do not interfere in their product quality specifications,” Cobham said.

    The DG urged manufacturers to establish necessary mechanisms that would facilitate growth in the manufacturing sector, as well as the national economy.

    He reminded manufacturers that attention had shifted to the patronage of locally-produced goods, as an alternative to imported goods, for job creation, economic development and sectoral? growth.

    Cobham argued that if locally produced goods are of good quality, buyers would willingly change their taste preferences for imported goods and embrace made-in-Nigeria products.

    The DG alleged that corruption was the bane of the fight against substandard goods, as most producers had shunned standards for quick riches, at the expense of buyers.

    He urged the relevant government agencies to ensure substandard goods were removed from circulation.

    Issues on global tax system dominate devlt partners’ discussion The United Nations (UN) and other development partners, during the week, took practical steps to discuss “unresolved issue” of a global tax aimed at combating international tax dodging and illicit financial flows.

    The discussion was one of the side-line events at the third “Financing for Development Conference (FfD)”, which opened in Addis Ababa, the Ethiopian capital.

    Many of the discussants were representatives of non-governmental organisations and advocacy groups.

    One of them, Pooja Rangaprasad of the Financial Transparent Coalition, urged governments to take advantage of the conference to create “an equitable tax body to tackle the problem of tax dodging and corporate opacity”.

    “But if the status quo remains, and standards continue to be set by the Organisation for Economic Cooperation and Development (OECD), we will be stuck with an unjust system. The unjust system cannot solve the problem of illicit financial flows. The rest of the world will remain on the outside looking in’’ Rangaprasad said.

    The OECD, which is made up of 34 rich countries, said that it was currently setting new standards in multinational profit shifting and cross-border tax dodging.

  • Manufacturers spend N3.5tr yearly on generators, says NLC

    Manufacturers spent an estimated N3.5 trillion annually to run power generators for production due to the collapse of public electricity, the President of Nigeria Labour Congress (NLC), Comrade Ayuba Waba, has said.

    Speaking at a business luncheon for managing directors/chief executive officers organised by the Ikeja branch of the Manufacturers Association of Nigeria (MAN) in Lagos, he said the energy sector is critical to the manufacturing sector of the economy.

    “Any government that is serious about reviving the economy must make the revival of the power sector a priority. The challenges faced in terms of decayed infrastructure, bad road and epileptic power supply are necessary factors in production and their deficits have made manufacturing difficult, leading to the closure of not a few industries while a lot more had to relocate to other countries.

    “It is auspicious that both manufacturers and labour build a strong alliance to step up campaigns for the revival of our economy, which can only be done through the reactivation of all infrastructures needed for real production,” he said, adding that apart from infrastructure decay, manufacturers are confronted with other challenges, particularly indebtedness.

    Ayuba said: “While you have to borrow to produce, majority of your corporate consumers, particularly government are hugely indebted to some of you. Another challenge we know you face is the importation of products, which you also produce locally. These imported products take advantage of your deprivations in the area of infrastructures to bring in goods, most of which are substandard and sell them cheaper than yours.”

    He said there can’t be fair competition when cost of production, standards and other environmental factors are not the same. “We therefore, urge government to impose total ban on the importation of all goods produced by our local manufacturers. We believe our country, with over 160 million population can be a major manufacturing hub in Africa if our government encourage our local manufacturers,” he said.

    The NLC President added that the Nigeria Customs Service (NCS) is not helping matters on the issue of importation of banned and fake products, adding that NCS should be patriotic in their duties by protecting the people, economy and the national interests at all times.

    “Our borders are too porous, and they need to urgently defend their profession by ensuring banned and adulterated goods don’t cross into our country,” he said.

  • Manufacturers count losses of economic lockdown

    Manufacturers count losses of economic lockdown

    For the first time in Nigeria, power supply from the national grid hit ground zero, throwing Africa’s largest economy into unprecedented darkness and chaos. The three-day blackout, which began on May 24, was triggered by a system collapse and the strike action embarked upon by oil and gas workers. Although, normalcy is gradually returning, the crisis left business operators in all sectors of the economy, especially manufacturers, severely bruised, prompting renewed calls for the deregulation of the downstream sector of the oil industry. Assistant Editor CHIKODI OKEREOCHA reports.

    Nigerians are known for their resilience and never-say-die disposition. They have the uncanny ability to endure unsavory situations, smiling through them or shrugging them off. But in the last two weeks, it has been extremely difficult to extract a smile from Nigerians. The precarious state of the economy, especially in the days and weeks leading to the inauguration of President Muhammadu Buhari as Nigeria’s fifth democratically elected President on Friday, May 29, hardly gave anybody cause to smile. For the first time in history, there was zero electricity supply from the national grid. For three days, Sunday, May 24 to Tuesday, May 26, most residential, commercial and industrial consumers watched helplessly as their businesses crumbled under the weight of a major system collapse that plunged the nation into unprecedented darkness.

    The system collapse was said to have been caused by Nigeria’s weak transmission infrastructure. And as if that was not enough embarrassment, the situation was worsened by the industrial action embarked upon by Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and Nigeria Union of Petroleum and Natural Gas Workers (NUPENG). The strike by the two major unions in the oil and gas industry disrupted gas supply to the electricity plants. Eighteen out of the 23 power plants in the country were unable to generate electricity due to shortage in gas supply to the thermal plants, according to Chairman of National Electricity Regulatory Commission (NERC), Dr. Sam Amadi.

    Going by the record, Nigeria, that prides itself Africa’s largest economy, generates 1, 327 megawatts (MW) of electricity for its 170 million people, even as the former Minister of Power, Prof Chinedu Nebo put the electricity need of the people at more than 150,000 megawatts.

    Amadi stated that one of the hydro stations had water management issue, which led to the loss of over 2, 000 mw. The Nation learnt that 70 per cent of power generation in the country is from gas-fired turbines, leaving 30 per cent to hydro. The Federal Government under the ousted Peoples Democratic Party (PDP) declined experts’ calls for the diversification of energy sources. It failed to explore alternative power sources such as renewable energy, including coal, solar, wind and biomass. In the heat of the crisis, power generation dropped to an all-time low of 1, 327 mw down from about 4, 500 mw in April.

     

    Manufacturers, business operators groan

    Although, normalcy is gradually returning after the aggrieved unions called off the strike on May 25, but business operators in all sectors of the economy, especially manufacturers and industrialists, have been counting their loses. Before the blackout, the electricity demand by members of Manufacturers Association of Nigeria (MAN) stood at about 3, 000 mw for optimal performance, but they have been getting less than 1, 000 mw gets to the Association.

    Records have shown that over 75 per cent of the electricity needs of manufacturers are generated in-house, leaving only 25 per cent coming from the utility firms. A source close to the Electronics and Electrical Sectorial Group of MAN confirmed this. The source said members of MAN invest about N2 billion per week to power their plants.

    The source, who pleaded anonymity because he was not authorised to speak for the group, described as unfortunate that MAN members pay electricity consumption bills above N120 million monthly.

    Noting that it is difficult to quantify how much manufacturers lost to the three-day outage, manufacturers may have lost about N5 billion.

    The amount, he said, does not include man-hour losses damages to machines, tools, raw materials and disruption to production processes as well as staff redundancy as workers earned their salaries for the period they were unproductive. “When power goes off, waste materials, manpower, time and so many things are wasted. At the end of the day, you discover that you are not making profit,” the source said.

    It is easy to see why manufacturers rue the economic lockdown. For one, it added to their long list of woes, as most of them have long been bogged down by rising production cost due to inclement operating environment.

    The business environment had taken a turn for the worse following the devaluation of the naira in the wake of the crashing crude oil prices at the international market.

    The implication of the latest crisis is that the hope of an early reversal of Nigeria’s record as the most expensive country to do manufacturing business in the world may not be realised soon. At the moment, cost of manufacturing in the country is about nine times that of China, four times that of South Africa and about twice that of Ghana. Manufacturers have had to contend with falling profit margin, which remains a major threat to business sustainability and global competitiveness.

    MAN’ President Dr. Frank Jacobs said last week that manufacturers are faced with payment for electricity not consumed.

    “Despite the poor energy situation in the country, NERC has maintained increased electricity charges not considering its implication on the economy, especially on the productive sector,” he said at a media luncheon at MAN’s House, in Lagos.

    Dr. Jacobs said despite the current high tariff from NERC, the manufacturing sector spends so much on alternative energy sources for production and the implication was increase in the average cost of production in the sector, which lowers the competitiveness of locally produced goods against imported close substitutes.

    He urged the new government to streamline electricity tariff to reflect the actual consumption by the industries instead of the current use of estimated bills.

    Yet, manufacturers are not the only ones counting their losses. Smaller business operators are equally feeling the pains. For instance, dealers in frozen foods in Ijora-Olopa,  Lagos, last week, cried out over heavy loses inflicted on them by the blackout. The frozen food dealers under their umbrella association, Ajeromi Frozen Food Market Association, raised the alarm that between May 23 and May 25 alone, they lost food items estimated at N10 million.

    President of the association, Alhaja Afusat Popoola, who listed the lost items to include chicken, turkey, fish, shrimps, gizzard and prawns, said members of the association were caught unawares because they never envisaged a prolonged energy crisis.

    Her words: “The traders were crying when we ordered them to surrender all the decayed food items for destruction on Tuesday. The market has a reputation for selling fresh frozen food and we cannot allow any trader to sell bad frozen food under our leadership.

    “What we destroyed on Tuesday because of power outages and our inability to buy petrol and diesel was worth more than N10 million. We are appealing to the Eko Electricity Distribution Company (EKEDC) to always consider the impact of outages on our business and the health of the general public. Our business depends on regular supply of electricity.”

    She lamented that irregular electricity supply had forced many traders out of business and also made many to be indebted to the banks.

    Mrs. Popoola said: “We used to have many frozen food traders in this market before, but this power outage has forced them out business. Previously, when power supply was regular, we used to sell more than seven trucks of fish, turkey and chicken, daily.

    “There is no kind of fish that one will not find in this market before because it is the number one frozen food market. But, the poor power supply has liquidated many traders. Some of them who use generating sets spend close to N80, 000 to buy diesel or petrol monthly. By the time one removes this amount from monthly sales, you discover that you’ve spent above your profit and part of your capital to buy diesel.”

    The crisis also left sour taste in the mouths of operators in the aviation sector. The blackout forced many domestic airlines to cancel flights due to scarcity of Jet A- One. Most passengers were stranded at the general aviation terminal of the Murital Mohammed International Airport (MMIA), Ikeja, Lagos, as fuel shortage disrupted flights’ schedules. The collateral losses were mind-boggling. An aviation source told The Nation that for each of the three days, Arik, the biggest domestic airline, lost about $1 million.

    This translates to about $3 million for the three days the crisis lasted. With about seven domestic airlines operating in the country, the source, who declined to be mentioned, said the local aviation industry lost close to $10 million in ticket sales alone to the economic shut down.

     

    Banks, telecom firms also affected

    Bank customers were jolted when, in the hit of the crisis, banks started scaling down operational time from the official closing time of 4pm to 1pm, citing the crippling fuel shortage as reason. The Guarantee Trust Bank (GTB), First City Monument Bank (FCMB), Sterling Bank and First Bank Pls, among others, sent SMS to their customers to bear with them.

    For instance, in a message sent to its customers, FCMB stated clearly, “Dear customer, our branches will close at 1pm from Monday May 25th, 2015 due to the shortage of petroleum products. All our alternative channels will remain available.” However, there are banks that shut down banking operations, but could not communicate same to their customers, a situation that infuriated their customers.

    Unlike in the other sectors, the loss suffered by the banking sector to the crisis could not be ascertained. Some banking and finance experts who told The Nation that banks only wanted to minimise or cut their losses; that much as the banks were losing money, they were also saving cost by scaling down operations. Besides, all their electronic (e-channels) were active, allowing transactions to go on.

    However, customers did not find the situation funny, as some of the Automated Teller Machines (ATMs) in major cities across the country had network problems as the inverters that power the network had little or no power to run the machines. It is inverter that powers ATMs after daily banking operations. Anytime the inverter runs down, the ATM will seize to work. The result: long queues of angry and frustrated customers.

    Many customers of telecoms services providers also got their share of the frustration following serious service degradation caused by difficulties in getting diesel to power the base stations.

    All the major service providers such as MTN, Airtel and Etisalat warned that the scarcity of petroleum products particularly diesel was hitting hard on their operations.

    For instance, MTN, in SMS sent to its subscribers, informed that they might experience “degraded service” due to the scarcity. The message read: “Dear customer, due to the diesel scarcity nationwide, you may experience degraded services.” The message, however, said the company was working hard to tackle the problem and solicited for the understanding of its subscribers.

    Although, MTN and indeed, all other operators assured that they were working to continue to deliver quality services despite the fuel scarcity challenge. The Nation however learnt that such assurances were only intended to pre-empt a possible backlash from angry subscribers, who were actually experiencing poor quality of services, and it could not have been otherwise, as base stations and switches across the country are powered with generators.

    The situation was not different at the nation’s ports where operations suffered serious hitches due to the scarcity. “The ports and terminals are driven by heavy-duty equipment and cranes, which are powered by diesel. It is sad to note that it is becoming increasingly difficult for our members to replenish their diesel stock due to the lingering scarcity of the product,” members of Seaport Terminal Operators Association of Nigeria (STOAN), said in a statement last week.

     

    Small scale businesses shut down

    Most small scale businesses simply went on vacation and locked up their ware points. Soft drink, bottled water and sachet water hawkers, (aka pure water), recorded huge losses, as patronage tumbled because of lack of electricity to chill the drinks. Barbing and hair salon operators shut down for lack of fuel to power their generators. Those who managed to maintain skeletal services after scouting for fuel at between N600 and N650 per litre, jerked up the cost of their services.

    Recounting her ordeal, a supervisor with an upscale hotel in Lagos, Miss Chidi Igwe, said she trekked the entire Shagari Estate on Ipaja Road in search of a salon to fix her hair. She said the one that opened for business in the sprawling estate charged her N1, 800 against the usual N800.

    She also lamented power outage in the last one month despite the fact that her subscription to DSTV, the PayTV service provider, never stopped running. Besides, Miss Igwe said she cannot even remember the last time she went to work with her dress ironed.

    Eateries, beer parlour owners recorded low sales, as customers stayed indoors. Those who managed to leave their homes contended with skyrocketed fare, as transporters increased fares fivefold. For instance, passengers commuting from Iyana-Ipaja to Obalande/CMS coughed out between N600 and N700, up from the original N200. Those who could not cope with the high transportation cost trekked long distances. Nigerians cursed and hissed. It was bedlam.

    It is extremely difficult to put a figure to what the nation lost to the economic lockdown, considering the nation’s penchant for poor record keeping. However, experts and operators say that the financial hemorrhage and social dislocation could be huge running into hundreds of billions of naira.

     

    Calls for deregulation heighten

    With the inauguration of a new government on May 29, the Director-General, Enugu Chamber of Commerce, Industry, Mines and Agriculture (ECCIMA), Mr. Emeka Okereke, said a fresh impetus has come the way of President Buhari to deregulate the downstream sector of the oil and gas industry. He said the new government only needs to muster the necessary political will and courage to call the bluff of certain cabals in the oil and gas industry and deregulate.

    “The government has no business in doing business. Deregulation is an idea whose time has come. Put the right policies in place so that private investors can come in,” he told The Nation.

    Mr. Okereke noted that because of political exigency, the administration of former President Goodluck Jonathan failed to take the bull by the horns and deregulate the sector.

    While pointing out that this was why the administration buckled under the pressure of labour unions and civil society groups in 2012 when there was nationwide protest against the removal of fuel subsidy, he said subsidy has become unsustainable.

    “Subsidy doesn’t make economic sense anymore. It has become unsustainable. We will never come out of the wood as long as we continue to subsidise the price of petroleum products. We cannot continue to postpone the evil day,” Okereke said.

    He also urged the new administration to sustain the normalcy that is gradually returning to stabilise the oil sector by plugging all the leakages.

    The ECCIMA chief has an ally in the Nigeria Employers’ Consultative Association (NECA) which has also called for proper deregulation of the sector. NECA’s Director General Segun Oshinowo argued that the recent reduction in the price of petroleum products by the government begs the more fundamental issues of appropriate policy framework that will promote investment in the downstream sector of the oil and gas industry and put a stop to the embarrassing and shameful importation of petrol.

    He said: “Our expectation therefore, is that the government will seize the opportunity of the current decline in the price of crude oil to commence implementation of the policy on deregulation of the downstream sector of the oil and gas industry.

    “This is a unique timing the government cannot afford to miss as full implementation of deregulation, which in time past had led to price increase and reaction by the labour movement in form of industrial action, does not have any negative effect on the masses.”

    The NECA director-general added that rather than reducing the price of petrol from N97 to N87, there ought to have been a more holistic announcement of a new policy thrust of deregulation of the downstream sector and privatisation of the four refineries, which have now become sink-holes.

    According to him, the economy stands to gain from deregulation.

    Oil marketers under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) could not agree less, noting that deregulation would stimulate investment in the sector and encourage the establishment of private refineries.

    Its Executive Secretary, Mr. Obafemi Olawore, said the government should muster the courage to fully deregulate and remove subsidy or embark on continuous subsidy regime payment as at when due.

    “If the government likes, it can introduce gradual removal of subsidy, but it should not go beyond six to 18 months,” Olawore said, adding that if fully deregulated with rules, Nigeria will have serious investors coming in to invest adequately.

    He insisted that deregulation remains the answer and that the government must talk to the people and let them understand the advantages.

    Henry Boyo, an economist, noted that the 23 firms franchised to established refineries have not invested their funds for fear of being asked by the government to sell products at regulated prices

    According to Boyo, crude oil produced in Nigeria, Saudi Arabia, or America has a uniform international commodity price.

    “In the same vein, the process of producing crude oil or refined petroleum products is the same everywhere in the world; it is the same equipment. So, if you put in the same feed stock what you will get at the end will be the same price,” he told The Nation.

    Noting that monies spent by the Federal Government through the Nigerian National Petroleum Corporation (NNPC) on Turn Around Maintenance (TAM) of the state-owned refineries were enough to build new refineries, Boyo said the point remains at what price will the government sell the products.

    He said notwithstanding the federal ownership of the refineries, products cannot be sold to marketers at below production cost.

    His words: “In no time they will pack their loads and go. So, the question of whether we sell off the refineries is not the issue, it is pricing, “ adding that once the pricing is right, those who got licenses for refineries will swing to action.

    He, however, said the process of influencing the pricing has to do with the  naira-dollar mechanism.

    Will the payment of about N1 trillion annually as subsidy continue under the President Buhari administration, when the nation’s revenue base is bleeding amidst rising debt burden of about $60 billion?  Will the new administration remove subsidy and risk confrontation with organised labour and the civil society? How he dances around this minefield will be a litmus test of his resolve to fix the economy.

  • Manufacturers seek deregulation of oil sector

    Manufacturers seek deregulation of oil sector

    Manufacturers warned at the weekend that the economy would die, if the crippling fuel scarcity continues.

    The Lagos Chambers of Commerce and Industries (LCCI) called for a drastic response to the situation which, it said has a risk of social unrest.

    A faction of the Nigeria Labour Congress (NLC) is threatening a strike over the crisis.

    The scarcity has virtually crippled the economy, with telecom firms warning that they could scale down their services for lack of diesel to power their base stations.

    Air travel has been hit as flights have been either cancelled on the domestic routes or the frequency substantially slashed.

    Food prices have risen steeply in many parts of the country due to the cost of transportation.

    LCCI  President Remi Bello,  in a statement, said most economic and social activities had been paralysed, with the danger of an imminent shutdown of the entire economy. “There is no evidence of active engagement with stakeholders in the petroleum industry to bring an end to the crisis.  The government needs to demonstrate accountability to the people,” he said, adding:

    “The impression should not be created that governance has been abandoned.  The administration has responsibility for the management of government business till the very last day of its tenure. The country and the economy should not be allowed to continue to drift as if there is no one in charge

    “The power sector has practically collapsed, with power generation slightly above 1000 megawatts.”

    Bello warned that the option of alternative power generation, which the private sector has resorted to, “ is fizzling out, with the acute shortage of petroleum products”.

    He said: “Economic activities across virtually all sectors are progressively grounding to a halt, communication services are on the verge of being shut down as telecommunication companies have given indication of imminent shutdown of their base stations.

    “We call for an urgent intervention by President Goodluck Jonathan  to bring a halt to the imminent collapse of economic and social life in the country. There should be an immediate engagement of stakeholders in the petroleum industry to discuss the outstanding issues of indebtedness and related labour matters, in the interest of the economy and the citizens. The situation should not be allowed to degenerate any further

    “It is in the overriding interest of the economy and the citizens to quickly deregulate the sector.”

    Mobile giant MTN said it urgently needed diesel to prevent shutting down services.

    MTN Nigeria posted a message on Twitter, saying most of its base stations and switches are powered by generators. The company, with 50 million subscribers, said it might be compelled to suspend service if it does not receive significant amount of fuel in the next 24 hours.

    Another leading telecom company, Airtel Networks Limited, in a statement, said “the prevailing situation in the country regarding the scarcity of diesel and other petroleum products is at present impacting negatively our commitments to delivering best-in-class quality of service and seamless telephony experience to all Nigerians.

    “While we are currently doing everything within our means as well as going the extra mile to ensure that all our base stations and switches are up and running, it is sad to note that it is becoming increasingly difficult to replenish current stock of diesel due to the lingering scarcity of the products.

    “We are also concerned that, if the situation persists, it may have adverse effects on our network, impacting both voice and data services.”

    Arik Air, the biggest airline operator, yesterday operated only one-third of its schedule. It cancelled all domestic flights on Saturday as the fuel shortage worsened. Spokesman of the airline Banji Ola said: “We’re operating just a few flights today, maybe 30 per cent of our normal operations. We could not operate domestic flights yesterday.”

    Arik Air, with 26 aircraft, cut two-thirds of its 120 daily flights. That included flights to London’s Heathrow and New York needing to stop over for fuel in Kano, about 1,000 kilometers (620 miles) north of Lagos, Banji said.

    Aero Contractors Ltd., Nigeria’s second-largest carrier, said on its website that “all our flights will not operate regularly as scheduled” due to fuel scarcity.

    In a statement, Aero said:” Due to the general scarcity of aviation fuel (Jet A1) in the country, the airline will not be able to operate over 80 per cent of her domestic flights as scheduled.

    “In the last few weeks, the supply of aviation fuel has been very irregular, which has compelled the airline to cancel some flights. We apologise to our esteemed customers for the inconvenience they may have been experiencing due to flight delays and cancellations caused by the scarcity of aviation fuel.

    “We urge our customers to always check our website at www.flyaero.com or contact the call centre agent to affirm if their scheduled flight will operate. Aero regrets any inconvenience the changes will cause. All measures are being made to ameliorate the situation and revert to her regular flight schedule. We hope that the situation improves very soon.”

    But Air Peace said it was not affected by the scarcity of aviation  fuel.

    An official of the airline said operations had been running unhindered

    Medview Airlines, DANA Air and AZMAN Air are also running normal flights.

    The Comrade Joe Ajaero-led faction of the NLC has described the chronic fuel scarcity as a war against the citizens and a deliberate attempt to subject 170 million Nigerians to economic suicide.

    The faction’s deputy President Comrade Issa Aremu, in a statement, said:

    “Nigeria is the only country on earth which unacceptably and criminally denies its citizens basic sources of energy; fuel and electricity?’.

    “After several weeks of deliberate deprivation of petroleum products by both the government and marketers alike with all the associated hardship, it is time all Nigerians stop agonising and rise in unison against this (Nigeria’s) agony capitalism.

    “With petroleum products’ prices as high as N350 per litre (far above N87 per litre!) claims and counter-claims between Finance Minister Ngozi Okonjo-Iweala and marketers over so-called  N159bn subsidy payments and all state actors looking indifferent, Nigeria is the only country on earth  which unacceptably and criminally denies its citizens basic sources of energy; fuel and electricity.

    “What is happening in Nigeria amounts to economicide which is a conscious subjugation of 170 million people to economic suicide and economic ruination through unsustainable petroleum import-based racket that denies petroleum products needed for mass movement of goods and services, enriches few cabal, puts pressure on foreign exchange, fuels products hoarding and promotes sheer price robbery of the already impoverished citizens.

    “This is an unofficial declaration of war against the citizens by combined forces of irresponsible ruling elite and business crooks. Economicide, just like genocide, is a deliberate and indiscriminate policy violence against a group of people with the intent to destroy the entire group physically and economically”.?

  • ECOWAS CET: Why manufacturers are hopeful

    ECOWAS CET: Why manufacturers are hopeful

    Few weeks into the implementation of the Economic Community of West African States (ECOWAS) Common External Tariff (CET), Nigeria, Africa’s largest economy, is tipped by manufacturers and members of the organised private sector as potentially the biggest beneficiary of the adoption of a common regional tax regime. The new policy, which took effect from April 11, may have opened a window of opportunities for this country’s industrial growth. Assistant Editor CHIKODI OKEREOCHA  reports.

    It took assurances by President Goodluck Jonathan and Minister of Finance/Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, to convince manufacturers and business operators that the adoption of the Economic Community of West African States (ECOWAS) Common External Tariff (CET), which took effect on April 11, this year, would deliver bountiful benefits to them and the economy.

    ECOWAS CET allows goods from any other part of West Africa into Nigeria without the imposition of any tax, import duty or levy. It means that goods imported into a Francophone country will not necessarily be cheaper or more expensive than those entering another Anglophone country, such as Nigeria or Ghana. CET, according to experts, is a mild form of economic union, but may lead to further types of economic integration.

    In addition to having the same customs duties, the countries may have other common trade policies, such as having the same quotas, preferences or other non-tariff trade regulations, apply to all goods entering the area, regardless of which country within the area they are entering.

    Apart from resulting to significant improvement in the implementation of the ECOWAS Trade Liberation Scheme (ETLS), giving rise to the concept of a regional customs union, the scheme is seen as an effective instrument for harmonising the import policies of member-states which will, in turn, strengthen the framework for the realisation of a common market.

    The approval for the implementation of the new tariff was conveyed in a statement signed by Mrs Okonjo-Iweala. The NCS said all imports arriving in the country beginning from April 11, shall be subjected to the rates contained in the CET 2015-2019 and 2015 Fiscal Measures without recourse to the rates applicable before the coming into effect of the ECOWAS CET 2015-2019.

    A statement by NCS spokesman, Deputy Controller of Customs, Mr. Wale Adeniyi, said that the approved Supplementary Protection Measures/Fiscal Policy Measures comprised an Import Adjustment Tax list, which involves additional taxes on 177 tariff lines of the ECOWAS CET.

    The ECOWAS CET also covers a list of goods whose import duty rates have been reviewed to encourage more development in strategic sectors of the economy and an Import Prohibition List (Trade), applicable only to certain goods originating from non-ECOWAS countries.

    However, before it came into force, government needed to get the buy-in of stakeholders before its implementation, which was why the President assured that Nigeria had successfully negotiated a strong CET agreement with ECOWAS partners on the need to protect the country’s strategic industries from foreign domination.

    The Minister assured manufacturers that efforts were on to establish a development finance institution to make credit accessibility easy and reduce high cost of funds. She emphasised that efforts would be made to ensure that indigenous manufacturers gained from CET scheme, which took off on April 11.

    The assurances were neccessary to allay the fears and suspicions of manufacturers and members of the Organised Private Sector (OPS) most of who fear that CETwould throw the nation’s borders open to influx of goods from within the West African region when implemented.“You can’t have an industrial growth in this kind of environment with a CET that exposes local industries and products to unequal competition,” an economist, Mr. Henry Boyo, argued.

    Members of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) were no less apprehensive. NACCIMA noted, for instance, that although it appreciates the need for ECOWAS CET, but is also concerned that it might turn Nigerian into a dumping ground, a situation that would pose a huge challenge for the nation’s growing industries that are battling with the devaluation of the naira, among other challenges.

    “The need to ensure compliance with all protocol signed by ECOWAS to eliminate dumping of goods in the region becomes of great importance if our growing industries are to survive with the implementation of CET and for the realisation of the Nigeria Industrial Revolution Plan (NIRP),” First Deputy National President, NACCIMA, Chief Bassey Edem, said.

     Common tariff, many benefits

    Few weeks into the implementation of the new policy, the picture appears to be getting clearer despite initial apprehensions. Already, the fears and suspicions earlier expressed by operators are gradually giving way to optimism and hope that Nigeria potentially could be the biggest beneficiary of the CET regime. Such optimism is anchored on the strategic economic advantage Nigeria enjoys as Africa’s most populous and largest economy.

    According to experts and operators, one of the areas such advantage would find expression is in curbing smuggling, which has been a pain in the neck of Nigerian manufacturers. Former director-general, NACCIMA, Dr John Isemede, said the effect of CET within ECOWAS region could discourage smuggling and promote regional trade. He said: “The only key thing is that it should ordinarily reduce smuggling within the region because what has promoted smuggling is disparity in tariff.

    “If a product in Nigeria is attracting 70 per cent and the same product in Cotonou or Togo is attracting 10 per cent, it is likely that smugglers and other unpatriotic traders will follow the rules of the lowest tariff but if the same tariff obtains between Lagos and Mauritania then there is no advantage of smuggling by unscrupulous traders.”

    President, Association of Nigerian Licensed Customs Agents, Prince Olayiwola Shittu, thinks so too. “Definitely, it will stop smuggling, create competition among nations and attract more vessels to Nigeria because there will be no more diversion of cargoes,” he said, asking, “If what you are going to pay in Ghana or Ivory Coast is the same thing you are going to pay in Nigeria, why take your goods there?”

    Apart from a possible reduction in smuggling, operators are also hopeful that Nigeria would take advantage of the window of opportunity CET would open up by way of enlarging the nation’s industrial sector through higher economics of scale.

    “There will be a kind of scale advantage, which is good,” says Registrar/Chief Executive Officer, Institute of Business Development (IBD), Mr. Paul Ikele.

    He told The Nation thatthe essence of having a common tariff is to build international business relations integration so that certain rules, which can assist each nation to stabilise its economy are harmonised.

    Ikele further pointed out that CET would make room for faster business development, faster economic development, faster trade and integrated business exchanges like currencies and agro-allied businesses.

    “It will also ensure stability within the economic states because in each area you look at where you have comparative advantage. For instance, in Nigeria we have oil, we have cocoa, we have agro-allied products; we even have mineral resources. We look at the ones we have in quantum, which we have an edge over all other states so that all other countries will do the same,” he added.

    The IBD Registrar also said the implementation of CET would strengthen national institutions through peer learning among members. “Non-productive economies might want to key into it and take advantage to move into productive ventures, he pointed out, adding that with the world moving into globalisation, CET makes it possible for Nigeria to adapt to those areas it could generate revenue to assist her boost bottom-line.

    He also dispelled fears that CET could make Nigeria a dumping ground. “It (CET) has to be controlled; there must be determinants. So, it will not open any floodgate for influx of cheap goods if there are controls,” he explained, adding, “Before a tariff is published it has to be harmonised per country; you have to determine the areas you have an advantage that will generate economic strength for you. Each country has to look at areas where it has comparative advantage before keying into the tariff.”

    Isemede also said CET will make for better planning. According to him, operators will be able to plan better now because they know that the tariff will not change overnight, which has been a challenge for Nigeria in particular. “If there is any need to change tariff, ECOWAS as a body must meet, member countries must agree to that tariff change. So, that will make for better planning and companies will be able to plan long term, fully aware that their tariff will not change overnight and affect their investment output,” he said.

    Operators are also excited over the prospects of CET curbing perceived excesses of the Nigerian Customs Service (NCS) since there will be a common tariff in the ECOWAS sub-region that the NCS cannot influence. The thinking is that with CET there is no way the tariff of the NCS would be different from other customs services in the ECOWAS sub-region.

    “There is no way Nigeria Customs will give their own tariff anymore because there will be a common market. It will help shippers to make their plan, projections and sales margin unlike now that we can’t make projection and sales margin because you don’t know what to meet at the port,” President, Shippers’ Association Lagos State (SALS), Rev. Jonathan Nicol, reportedly said.

     The flip side

    However, experts say that there are gray areas that must be smoothened if Nigeria must benefit from CET. Isemede identified the need for harmonisation of the different tariffs. For instance, while countries, such as Nigeria, Ghana, and Gambia are Anglophone nations, Togo, Benin, Burkina Faso, are Francophone. Similarly, while Value Added Tax (VAT) is five per cent in Nigeria, 20 per cent in the francophone countries and 15 per cent in Ghana, he noted that only when these VAT harmonized can the sub-region talk about one external tariff.

    Notingthat Nigeria might not get to the Promised Land on the platform of CET unless VATs are harmonised, he called on ECOWAS to harmonise the different VATs in the countries for the smooth implementation of the policy. He alsosaid that cost of doing business in Nigeria is high when compared to other countries, which is why goods shipped into the country are cheaper than the ones made in the country, adding that there is need to address issues responsible for the high cost of doing business in Nigeria.

    The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, agrees with him. He said CET would have serious implications for the economy, particularly the manufacturing sector unless issues of high energy cost, high costs of funds, high regulatory charges, and high ports charges, among others, are not addressed.

     

  • Paints manufacturers’ tale of woes

    Paints manufacturers’ tale of woes

    About 70 per cent of raw materials used in the paint industry are imported. With the slide in exchange rate of the naira , coupled with lack of infrastructure and rising insurgency, local paints manufacturers are in a quandary, fearing that many firms in the sector may be forced to fold up, reports Assistant Editor CHIKODI OKEREOCHA.

    After two decades of uninterrupted operations, achieving 20 per cent market share, Chemstar Industry Nigeria Limited, manufacturer of Finecoat and Shield Paints, should be celebrating its success.

    The company, which began operation in a room in 1996 with three workers and two distributors,  boasts of over 1,000 workers and  2, 000 distributors spread across the country.

    It has also established factories in Johannesburg, South Africa; Accra in Ghana and Turkey. However, despite achieving between 60 and 65 per cent capacity utilisation, the company marked its 20th anniversary with measured excitement. Its turnover in the previous year, The Nation learnt, was low and, perhaps, did not warrant a loud anniversary.

    “Because of rising insurgence in the North, our turnover has plummeted, especially in the previous year from what it used to be,” Group Managing Director, Aderemi Emmanuel Awode, declared at the company’s 2014 Customers Forum in Lagos, as part of activities marking its anniversary.

    He said the company’s turnover plummeted as a result of rising cases of insurgence in the Northern part of the country, including Abuja, where about 65 per cent of the company’s turnover was realised. He also said high duties and tariff on imported raw materials were not healthy for business growth.

    Awode echoed the frustrations of other paint manufacturers, as well as other operators in the manufacturing sector whose businesses have been badly hit by ceaseless bombings by the dreaded Boko Haram insurgents in the north.

    Since 2009, when the crisis started, manufacturers whose businesses are located in the Northeast and Northcentral – the epicenter of the sect’s activities – have been recording unprecedented low turnover. Because of the bombings and kidnappings, manufacturers, including paints manufacturers, are unable to distribute their goods to the affected states in the North, a situation that eats into their profit margins.

    The Nation learnt that many people no longer want to go to the North for any reason, and this is affecting the distributive trade sector of the economy. Operators in the Small and Medium Enterprises (SMEs) sector, are worse hit by this restriction in movement due to their limited space, branch network and available funds. “The tempo of economic activities in the North has declined, access to markets by companies in the South has reduced, resulting in loss of sales; while many enterprises have relocated,” says Lagos Chamber of Commerce and Industry (LCCI) President Alhaji Remi Bello. He lamented that it had become difficult to attract investors because the risk of long-term investments had become enormous.

    The Chamber’s Director-General (DG), Muda Yusuf, also noted that the insecurity  had become a major challenge for investors, stressing that the economy of many of the affected states is on the verge of collapse with implication for investments and job losses.

    Yusuf, while explaining the outcome of an evidence-based account of experiences of members of the Chamber and the larger business community on investment climate in the second quarter of last year, said the challenges of the operating environment for business intensified in the second quarter across all sectors, and there were concerns over weak consumer demand reflecting the downturn in the economy.

    He said while the hospitality industry in the volatile states has been paralysed, many operators, especially SMEs, were relocating to other states with the attendant challenges.

    The DG also said many firms have lost about 30 per cent of their sales, as they could no longer access most part of the northern market. “Our report shows that manufacturing firms sourcing raw materials from the North are facing serious challenges, while projects funded by banks in the affected states are now at risk,” Yusuf said, adding that serious perception problem has been created for the country, as many bank branches have been closed, while sales representatives of many companies have fled the affected states, and many projects under construction in the North abandoned.

    Although Awode expressed optimism for a quick end to the Boko Haram insurgence for business to thrive, his optimism may have been short-lived following the threat of the slide in the naira exchange caused by sharp drop in the price of crude oil. He said that most of the raw materials used in the paint industry are imported.

    “About 70 per cent of our raw materials are imported, while payment for the raw materials is done in dollars. Import duties or tariff are on the high side. These and other challenges are confronting the growth of paints industry,” he lamented.

    The Chemstar GMD is not alone in his lamentation. Chairman of DN Meyer Plc, another major paints manufacturer, Sir Remi Omotosho, decried the trend where over 70 per cent of raw materials for paints and other products’ manufacturing is sourced from abroad despite that some of the raw materials for paints are available locally. He regretted that the drive for local substitution embarked upon in the country in the 1980s was abandoned and replaced in the 1990s by the import syndrome, with people relying heavily on imports.

    Sir Omotosho recalled that the Raw Materials Research and Development Council (RMRDC) was set up to explore alternative sources of raw materials for the local industries, regretting that all of a sudden, RMRDC disappeared from the radar. “That agency ought to be revived,” he told The Nation, in an earlier interview.

    While emphasising that a lot of materials used in the production of goods are available locally, the industrialist regretted that those who should be developing local raw materials would rather go and import them for sell.

    “There is need for the government to get RMRDC back in place in a purposeful, focused manner, visionary in its approach by collaborating with manufacturers to get a lot of the input produced locally,” he insisted, adding that there is need to employ a carrot-and-stick approach in the drive for local substitution. “If you rely on local raw materials, manufacturers will be compelled to contribute to a research fund for that body because we are going to benefit at the end of the day. If, however, you want to rely upon imported raw materials, tariff should be able to take care of that,” he said.

    Indeed, the paints industry is heavily raw materials import-dependent. And for paints manufacturers, already weighed down by skyrocketing cost of production due to dearth of infrastructure, the prevailing high exchange rate is overkill. First, it means that paint makers who borrow to import raw materials will do so at higher interest rates. Secondly, with the naira devalued, paints manufacturers now pay more naira for each unit of goods they import.

    While some of them now find it extremely difficult to finance their import bills, those who manage to do so contend with shrinking margins of profit. The toll is heavier on small scale paint manufacturers.

    According to experts, paint is composed of the following raw materials: pigments, solvents, resins, and various additives. While pigments give the paint its characteristic colour, solvents make it easier to apply. Resins aids dispersion; and additives serve as everything from fillers to anti fungicidal agents. Hundreds of different pigments, both natural and synthetic, exist. The basic white pigment is titanium dioxide (TiO2), selected for its excellent concealing properties while black pigment is commonly made from carbon black.

    Other pigments used to make paint include iron oxide and cadmium sulphide for reds, metallic salts for yellows and oranges, and iron – blue and chrome – yellows for blues and greens and even calcined kaolin, which the Chinese produce and export for the paint industry.

    Most, if not all these raw materials, are imported with huge foreign exchange despite that some of the agents can be produced locally. This was why Omotosho insisted that developing local substitute for imports by reviving RMRDC in line with the local content initiative is necessary if Nigeria must realise her dream of becoming an industrialised nation. “After satisfying her local needs, Nigeria may even export to other countries,” he said, noting: “If we are compelled to rely on our own internal resources I can assure you that those who are importing will begin to see the need to develop local substitute for the imports.”

    He said the government could encourage the drive for local substitution for raw materials through some sort of incentives since the government is mostly affected by the problem of import syndrome. “If we are producing the raw materials here, you know that people will be employed in those outfits manufacturing those raw materials. They will also be paying income tax and a lot of benefits will accrue to government,” he pointed out, adding that by doing so, Nigeria will stop creating employment for others, particularly in a country where the rate of graduate unemployment is very high.

    Besides, the Chairman of DN Meyer said those who are selling to local manufacturers are not producing them here; they import and sell to us.

    “Even when some of them say they have their own factory, they bring the raw materials and add some additives and sell to you. You can still do better than that because some of those basic things they are using to which they add some other agents can be produced here if we are dedicated and organised,” he stated.

    However, raw materials import with its attendant foreign exchange burden is not the only factor responsible for the less than sterling performance of paints manufacturers. Other challenges facing the industry include dearth of infrastructure, especially stable electricity supply, poor road network, multiple taxation, and high import duties and tariff, among others. For instance, almost two years after the privatisation of the power sector, manufacturers are yet to see any appreciable improvement in electricity supply, forcing them to rely heavily on in-house power supply at huge cost. Yet, power constitutes the single critical infrastructure to rev the manufacturing sector and create jobs

    These factors contribute to the high cost of production, which is said to be responsible for the high cost of goods produced locally compared to imported ones. The cheaper price of imported goods is blamed for the penchant of Nigerians to patronise imported goods to the detriment of locally produced goods. This is why many local industries, including paints manufacturers that could not stand the heat of the competition in the same market with imported goods are fast disappearing from the industrial landscape.

  • Manufacturers threaten shutdown over electricity tariff hike

    Manufacturers threaten shutdown over electricity tariff hike

    Manufacturers yesterday threatened to close shop, following the  increased electricity charges which impact heavily on their production.

    The Nigerian Electricity Regulatory Commission (NERC) recently reviewed upward the Multi Year Tariff Order (MYTO 2.)

    The manufacturers at a meeting in Abuja yesterday told NERC that the new tariff is not acceptable to them because of the parameters  used in computing it.

    Energy and fixed charges for factories and businesses in the MYTO 2.1, they said, are the highest in the world, thereby making it unsustainable to run businesses in Nigeria.

    They noted that could interrupt the expected success of the Federal Government’s industrial revolution policy, adding that fixed charges by the distribution firms had risen astronomically in the new structure.

    The Ikeja Branch Coordinator of Steel Manufacturers Group of the Manufacturers Association of Nigeria (MAN), Felix Okojie, said the commission must revert to the old MYTO, which took effect from June 2012 and had a five years life span to run.

    Okojie cited the decision of NERC to jack up fixed charge from N702.11 to N123, 321 for Abuja distribution network, N750 to N155, 923 for Benin and N781.13 to N226,797 for Kaduna as an attempt to destroy the manufacturing sector and throw people out of work.

    He further explained that a comparative analysis of the cost of energy in Nigeria and other countries showed that Nigerian business pays the highest in the world.

    “The MYTO 2012 to 2017, which was supposed to operate for five years, constituted our long-term planning. So, coming at the middle to increase and not just a mere increase but an increase of almost 44 to 45 per cent is completely destructive. In some areas, it is 100 per cent.

    “It is like nobody is actually thinking about the progress of industries in the country. You do not just wake up from nowhere and begin to disrupt a long term plan. In the MYTO, it was not mentioned that the five-year plan, which started on the 1st of June 2012, was going to be distorted at any time,” Okojie said.

    He added: “The explanation that they have the right to adjust it any time is completely new to us. Maybe that is internal administrative thing but even if they would have that, since we are the major stakeholders, they should carry us along.’’