Manufacturers see drop in diesel cost on improved power supply       

The relative stability in electricity supply in  the country has lessened the pressure on Automotive Gas Oil, otherwise known as diesel, used to fuel alternative sources of energy (power generators) for production purposes.

 This has led to significant reduction in the cost of production for many of the firms that are now favoured by this trend  in the  power  sector.

BusinessDay investigation revealed that patronage for diesel by consumers has thinned out in the last few weeks because electricity supply has been relatively stable and predictable.

Many suppliers of AGO who attested to this development, told BusinessDay that consumers don’t troop to their stations as they  used to  one or two  months ago because power supply  has  been stable.

At some of the filling stations visited by BusinessDay in Lagos, staffers said business in respect of Diesel has been low in the past few weeks.

Tola Faseru, national president, National Cashew Association of Nigeria, said:” Power supply  has improved in the last one month, but we cannot say power supply has improved because it usually increases during the rainy season. The dam has much water, so it is normal for the supply to increase.  If the current power supply can continue in the next six months, then we can say power supply has improved in the country.”

John Tudy Kachikwu, CEO of Jon Tudy Interbiz and chairman of SME Group at the Lagos Chamber of Commerce and Industry (LCCI), said his food processing firm used to spend about N50,000 each week on diesel, but I spent only N32,000 last week .

“My manager told me that electricity improved last week. So we spent N32,000 instead of N50,000,” he told BusinessDay on the phone.

Matthew Ibeabuchi, CEO of MD Services Limited, producer of chemicals, said he has reduced his diesel spend by over 50 percent.

“Electricity supply is a bit better now. Compared with what we had between March and May, we have some kind of relief now. It was too bad then, because we were incurring high energy cost but could not pass the cost onto consumers,” Ibeabuchi said.

Most manufacturers who use diesel are those in the small and medium category.

Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN), said power improvement is not happening in all industrial zones.

”Mgbidi (in Imo State) has not had power for a long time now. But the issue now is not even the grid power. Most of our members are generating their own power. Most of them converted to gas long ago, but the problem is that there is no gas now,” Jacobs said.

Further investigations into the power situation revealed the hydro power stations have improved in their generation capacity because of the increase in the water level of the power stations.
The total electricity generation in the last few weeks has ranged between 3,747.8 megawatts at peak periods and 3,265 megawatts at   off-peak with the hydro generating stations generating at almost full capacity.

An analysis of the  station by station performance  indicates  that Kainji hydro station generated 256 mw, Jebba 442mw, Shiroro 598mw, Egbin 445, mw, Okpai 421mw, Trans  Amadi 15.8 mw, Paras  32 mw, Ibom power 83.5mw, ASCO 15mw and Omoku 10 mw.

Surprisingly Afam VI operated by Shell Petroleum Development Company was not generating anything as at Thursday last week.

Power stations under the National Integrated Power Project are also not doing well because of  lack of gas supply.  For instance Geregu generates 145mw, sapele 111.5mw Alaoji 11.5mw Omotsho 110.5 Odukpani 84.6mw and Ihovbor 107mw.