Impact of Energy on the Manufacturing Sector in Nigeria

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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 SCOPE OF THIS STUDY This paper shall examine the impact of energy on the manufacturing sector in Nigeria. The manufacturing sector is an integral part of the industrial sector in any economy. The major policies and measures applied to promote their development and the strategies and the policy reforms needed to accelerate the pace of industrialization will be discussed, with emphasis on the capacity and industrial utilization of the manufacturing industries.

Also the perennial problems faced by the power sector in the economy will also be x-rayed 2.1 THE ROLE OF ENERGY IN MANUFACTURING Energy allows manufacturers to transform raw materials into final consumer goods. Raw materials pass through a number of intermediate stages, with these intermediates representing the bulk of industrial energy consumption. In an economic sense, energy performs work that adds value to intermediate products as they are progressively transformed into final consumer goods. The opportunities to improve energy efficiency occur at each step of the manufacturing process. Manufacturing processes vary by industry and are too numerous to list here.

In general, industry’s fuel inputs become energy that performs work. Manufacturers’ energy inputs typically follow this sequence:

• Primary energy input, which is the total volume of energy assembled to serve industrial needs • Central generation, which mainly occurs in powerhouses where fuel is converted to heat and power by a steam plant, power generator

• Distribution, which pipes heat and sends power from central generation to process units • energy conversion, consisting of motors, fans, pumps and heat exchangers that transforms heat and power to useable work and

• Processes, in which converted energy transforms raw materials and intermediates into final products.

2.2 FACTORS THAT INFLUENCE INDUSTRIAL ENERGY DECISIONS The Impact of Technology, Regulation and Market Forces Production decisions are paramount in industry, and...
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