Power crisis may worsen, more job cuts likely in 2008

Consequently, stakeholders in the sector are of the opinion that the situation, which paralysed production activities in most part of 2007, may result in job losses as well as factory closures in the New Year, if the issue of power is not addressed urgently by the government.

It is already affecting our members and people will definitely be thrown out of jobs, factories will close and there will be crisis in the country," observed Adeniyi Ogunsanya, vice president, Industrial, Small and Medium Industries of the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

Ogunsanya, also the managing director of Tropical Paints Limited, noted that the development is an indication that the country is not yet serious with project 2020, a programme geared towards launching Nigeria in the 20 bracket of the most developed countries of the world.

"This is the right time for President Umaru Yar’Adua to declare the state of emergency that he promised at the beginning of his tenure. The 2020 goal will be a mirage if the electricity problem is not tackled. And to make matters worse, the Nigeria Gas Company (NGC), has not even helped matters by declaring that they are only distributors and not producers of industrial gas."

According to the gas company, "what we get is what we distribute". They have also said they will need about N480 billion to meet local demand of the product," Ogunsanya noted.

Also in a telephone chat with Business Day, Bunmi Ogunpola, a senior manager with Winners Pharmaceutical Industries Limited, said the development is already affecting them negatively, as it has further driven up their cost of production, as a result of their reliance on diesel.

"Consumers are to bear the brunt of this as all local manufacturers are affected, and to stay in business, we will mark up our prices," Ogunpola said.

Business Day investigations revealed that apart from Phonix Steel, which has remained closed, most factories located at the Ikeja area of Lagos, south west, Nigeria, shut factories sometimes in 2007 due to gas cut, which occurred regularly at different periods of the year.

The switch from diesel to gas as an alternative power source was a relief to some privileged manufacturing companies in Lagos, a development which did not last as a result of the unreliability of gas supplies attributed to pipeline vandalism among other reasons.

According to a stakeholder in the food and beverage industry, "thieves continue to break into the gas pipelines up stream and steal liquid gas as it comes in its natural form, from the earth and before it is converted to gaseous form." Damages to pipelines caused by vandals were also a contributory factor to gas shortages. Consequently, the NGC shut down the pipelines for repairs. This happened severally in 2007, in addition to the inefficiency of the NGC, as a government organisation.

"We are not left out in this predicament; our suppliers also suffer the same faith, which affects our operations negatively. Our flour and packaging suppliers are also on gas, so when they suffer gas shut downs, their operations also get interrupted and it affects our supply chain, which further aggravates the situation," noted the source that prefers anonymity.

As a solution to the problem, the source advocated that security should be beefed up around the pipelines and also that liquid gas should be converted to gas at the source, so that the product is piped in gaseous form, making it almost impossible to steal from the pipelines.