Daily-Need MD: Unstable power supply making gas plants attractive to manufacturers

Daily-Need Group, a food and pharmaceutical firm, says high electricity tariff and the unstable nature of power supply in Nigeria have made gas plants more attractive to manufacturers.

In a statement on Thursday, Oluwatosin Jolayemi, group managing director of Daily-Need Group, spoke on the cost-saving opportunity gas infrastructure offers for producers.

On April 3, the federal government had approved an increase in electricity tariff for customers under the Band A classification to N225 per kilowatt — from N66.

Customers under this classification are said to receive 20 hours of electricity supply daily.

The hike became necessary as the government could no longer afford to pay subsidies on electricity, said Adebayo Adelabu, the minister of power.

Prior to the upward adjustment, the Manufacturers Association of Nigeria (MAN) had asked the Nigerian Electricity Regulatory Commission (NERC) to diversify energy sources as an increase would affect the manufacturing industry and consumers.

Segun Ajayi-Kadir, director-general of MAN, said manufacturers have been forced to use alternative energy sources due to the long-standing problem of electricity supply in the country.

Speaking on the struggles in the industry, Jolayemi said Nigerian manufacturers, also grappling with the naira devaluation which has increased the cost of importing critical feedstock for production, are switching to gas plants to cut downtime, emissions, operating costs, and remain competitive.

He said before his company switched from the national grid to gas and diesel generators, there was irregular power supply that caused a lot of losses on return on investments.

This, Jolayemi said, compelled the company to acquire a 1MW gas plant to remain focused on its strength.

He also said the Daily-Need contracted Clarke Energy to carry out both installations and service support — a decision the managing director said has yielded an optimal return on investments.

“With the installation of the gas power plant, we have been able to save at least 60% on the cost of energy generation,” he said.

“With cleaner energy generation, we have minimised carbon emissions from our facilities, which has fostered a more cordial relationship with environmental regulation agencies and other stakeholders interested in environmental sustainability.

“These relationships also translate to cost savings in obtaining some permits and licenses.”

Jolayemi further said the firm’s decision to migrate to the gas plant would make it possible to reduce production downtime due to machine breakdowns, especially for the highly sensitive electronic-dependent machines.

Yiannis Tsantilas, managing director of Clarke Energy, Sub-Saharan Africa said the “partnership with the Daily-Need Group aligns with the company’s drive to extend value to various manufacturers in Nigeria”.

Tsantilas said the manufacturer has continued to focus on providing quality lifecare products to its customers across Nigeria.

“This could only have been driven by extraordinary leadership and a commitment to deliver value to Nigerians,” he said.

Daily-Need Industries began operations in the 1960s as a pharmaceutical retailer. The company is the producer of the Penicillin Ointment.