Nigerian manufacturers spent N1.34tn on alternative electricity sources in 2025 as persistent power outages forced factories to rely increasingly on diesel generators, gas and other off-grid energy solutions to sustain production.

Data from the Manufacturers Association of Nigeria (MAN) obtained by The PUNCH showed that manufacturers’ spending on alternative power increased by about 21 per cent, rising from N1.11tn in 2024 to N1.34tn in 2025.

The latest increase highlights the growing cost of unreliable electricity supply to Nigeria’s industrial sector, with manufacturers increasingly bearing the financial burden of generating the power needed to keep their factories running.

Manufacturers’ Power Costs Surge

MAN data showed that expenditure on alternative electricity has risen significantly over the past decade, despite fluctuations in some years.

Manufacturers spent N25bn on alternative power in 2014, with the figure rising to N59bn in 2015 and N129.95bn in 2016.

The expenditure fell to N117.4bn in 2017 and declined further to N93.11bn in 2018 and N61.38bn in 2019.

Spending rose to N81.91bn in 2020 before dropping to N71.22bn in 2021.

However, the cost began rising sharply from 2022, reaching N144.5bn that year. It surged to N781.7bn in 2023 before crossing the N1tn mark at N1.11tn in 2024.

By 2025, manufacturers’ alternative power bill had climbed further to N1.34tn.

The development has raised concerns about the competitiveness of Nigerian manufacturers, particularly as businesses continue to face weak consumer purchasing power and pressure on operating margins.

Grid Power Supply Drops

MAN, led by Segun Ajayi-Kadir, said grid reliability deteriorated significantly in 2025.

According to the association, average daily power supply dropped from 16.7 hours in the first half of 2025 to 13.1 hours in the second half of the year.

The decline has increased manufacturers’ dependence on alternative energy sources, adding substantially to production costs.

Industry stakeholders have continued to call for more reliable electricity supply and increased investment in alternative energy infrastructure to reduce dependence on expensive diesel-powered generation.

Manufacturers Turn Away From DisCos

Many manufacturers are reportedly reducing their reliance on electricity distribution companies, popularly known as DisCos, by deploying gas and low-pour fuel oil (LPFO) to power their production facilities.

The shift is aimed at reducing losses caused by power interruptions during manufacturing operations.

According to the Nigerian Electricity Regulatory Commission (NERC), several major companies have obtained permits or licences to generate electricity for their operations.

They include Dangote Industries Limited, Flour Mills of Nigeria Plc, Lafarge Africa, Nigerian Breweries Plc, Cadbury Nigeria Plc, Procter & Gamble Nigeria Limited, Seven-Up Bottling Company Plc, Dangote Cement Plc, Guinness Nigeria Plc, Nestlé Nigeria Plc, Unilever Nigeria Plc and Mikano International Limited, among others.

Pure Flour Mills Limited in Rivers State obtained a licence to generate 546MW of electricity in 2025, according to NERC.

Dangote Industries Limited also generated about 1,500MW of electricity in 2025, according to Aliko Dangote. The Dangote Refinery alone operates a 435MW power plant, with capacity capable of meeting the total power requirement of the Ibadan Electricity Distribution Company, based on the comparison cited in the report.

Other companies with generation capacities include United Cement Company of Nigeria Limited with 105MW, Flour Mills of Nigeria Plc with 70MW and Lafarge Cement WAPCO Nigeria Plc with 90MW.

The growing investment in captive and alternative power generation underscores the extent to which unreliable grid electricity continues to affect Nigeria’s manufacturing sector.

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The Manufacturers Association of Nigeria (MAN) has warned that escalating tensions in the Middle East, particularly the US-Iran conflict, pose significant risks to Nigeria’s manufacturing sector, threatening growth projections and operational stability.

Director-General of MAN, Segun Ajayi-Kadir, disclosed this in a statement on Monday, noting that the sector is already grappling with the ripple effects of a global energy shock triggered by the crisis.

He said the development could derail the sector’s projected 3.1 per cent real growth target for 2026, as rising crude oil prices continue to push up domestic energy costs.

According to Ajayi-Kadir, manufacturers’ heavy reliance on gas and Automotive Gas Oil (diesel) has exposed them to escalating production costs, significantly eroding profit margins.

“Energy cost escalation is biting hard. Many manufacturers are seeing their margins wiped out almost overnight,” he said.

The MAN boss further highlighted the impact of imported inflation and rising freight costs, explaining that extended shipping timelines and higher logistics expenses are making it increasingly difficult for manufacturers to source critical raw materials.

“The implication is clear — production costs are rising sharply, while consumer purchasing power is weakening. This has created a situation where manufacturers are battling both high costs and unsold inventories,” he added.

Ajayi-Kadir warned that the dual challenge of soaring production expenses and declining demand could undermine industrial output and stall sectoral growth.

To mitigate the impact, MAN called on the Federal Government to implement urgent policy interventions, including fast-tracking the Presidential Compressed Natural Gas (CNG) initiative to reduce dependence on diesel.

The association also urged the creation of a dedicated foreign exchange window by the Central Bank of Nigeria for manufacturers to import essential inputs.

In addition, MAN advocated the domestication of petroleum supply chains, calling for local refineries to prioritise supply to domestic industries at competitive rates.

It also recommended a temporary suspension of multiple taxation, logistics levies and haulage charges to ease the burden on manufacturers.

“The current crisis highlights Nigeria’s vulnerability to external shocks due to dependence on imported inputs,” Ajayi-Kadir said.

“While global geopolitics may be beyond our control, our domestic response must be deliberate and strategic,” he added.

He stressed that the situation presents an opportunity for Nigeria to strengthen local production capacity and move towards manufacturing self-sufficiency.

Ajayi-Kadir warned that failure to act decisively could lead to widespread factory closures, job losses and a major setback to the country’s industrialisation drive.

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President Bola Ahmed Tinubu has officially unveiled the Nigeria Industrial Policy 2025, marking a renewed effort to reposition the country’s industrial sector and boost local production.

The policy was launched on Tuesday at the Bola Ahmed Tinubu International Conference Centre in Abuja, with Vice President Kashim Shettima representing the president. The formal unveiling follows an earlier soft launch in Lagos and reflects the administration’s plan to deepen value addition, remove structural bottlenecks, and accelerate industrial growth.

Speaking on the new framework, the president described the Nigeria Industrial Policy 2025 as a strategic roadmap designed to re-engineer the country’s industrial ecosystem and unlock value across key sectors.

He stressed that the success of the policy would depend largely on effective implementation, noting that many policies fail at the execution stage rather than at conception.

Tinubu said the policy aims to move Nigeria from exporting raw materials to producing finished goods, integrate small and medium enterprises into industrial growth, and align infrastructure and energy supply with industrial ambitions.

He added that the government would measure progress by the number of new factories, jobs created, export volumes, and the level of value retained within the domestic economy.

Vice President Shettima also called for stronger collaboration between the government and the private sector to deepen local value chains and drive job creation.

At the event, President of the Dangote Group, Aliko Dangote, urged the government to convene a national forum to address the country’s persistent power challenges, describing electricity as the most critical factor for industrial growth.

He acknowledged recent efforts to stabilise the foreign exchange market but maintained that reliable power supply remains essential for sustainable industrial expansion.

Also speaking, the President of the Manufacturers Association of Nigeria, Otunba Francis Meshioye, said manufacturers were focused on ensuring effective implementation of the new policy.

The Nigeria Industrial Policy 2025 was first introduced in January by the Minister of State for Industry at the Federal Ministry of Industry, Trade and Investment, Senator John Owan Enoh. The policy aims to raise manufacturing’s contribution to Nigeria’s Gross Domestic Product to between 20 and 25 per cent by 2030.

Officials say the framework is designed to reduce reliance on imports, strengthen domestic manufacturing, boost exports, and improve coordination across key sectors such as trade, finance, energy, infrastructure, and skills development.

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Calls are growing for the Federal Government to make the Lagos Airport perimeter fencing project a showcase of its “Nigeria First” policy by sourcing materials from capable local manufacturers in line with executive orders on local content.

MAN’s Director General, Segun Ajayi-Kadir, stressed that the association is not attempting to influence the contract award but is appealing for procurement decisions that place national interest above foreign patronage. He explained that prioritising local firms would help create jobs, ease pressure on foreign exchange, boost tax revenues, and strengthen Nigeria’s industrial base.

Ajayi-Kadir maintained that Nigerian companies have the expertise and facilities to produce Clear Vu fencing materials of international quality, insisting that indigenous manufacturers should not be sidelined in favour of foreign suppliers.

“The Nigeria First Policy, reaffirmed by President Bola Ahmed Tinubu, has renewed confidence among domestic manufacturers. It builds on Executive Orders, which mandate government ministries and agencies to give preference to locally produced goods and services,” he noted.

While commending ongoing government efforts to upgrade infrastructure, the MAN chief warned that resorting to imports for the Lagos Airport project would undermine stated policies and deny the economy vital benefits such as youth employment, foreign exchange savings, and stronger national security through self-reliance.

He pointed out that in previous projects, Nigerian producers were overlooked despite MAN’s advocacy, with imported fencing materials supplied instead a development he described as discouraging to the nation’s industrial sector.

“This project presents a chance to correct past missteps and to prove that the Nigeria First Policy is more than a slogan. It should be demonstrated through consistent implementation,” Ajayi-Kadir said.

Reaffirming the association’s readiness to work with government in driving inclusive growth, he concluded by urging that the Lagos Airport fencing materials be sourced strictly from capable Nigerian manufacturers.

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MAN’s Director-General, Segun Kadir-Ajayi, stated that Nigeria currently imports 90% of polypropylene, making local production crucial for economic stability.

The 250,000 metric tonnes annually imported will no longer be necessary, as local production ensures availability and reduces foreign exchange spending.

Polypropylene is essential for textiles, plastics, and furniture, making its local production beneficial for businesses that rely on affordable raw materials.

Dangote’s $2 billion petrochemical plant in Ibeju-Lekki, Lagos, has a 900,000 metric tonnes yearly capacity, ensuring national demand is met.

The plant will produce 77 polypropylene grades, supporting diverse industries, creating jobs, boosting investments, and enhancing economic sustainability.

This project reduces dependence on imports, strengthens local industries, generates employment, and helps improve Nigeria’s Gross Domestic Product.

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The recommendation was part of MAN’s position paper on Nigeria’s third-quarter Gross Domestic Product (GDP).

In the document, MAN highlighted the importance of improving credit access for industries by enhancing credit information systems and broadening the range of acceptable assets for collateral. “It is critical to create special windows for providing single-digit interest rates to productive sectors and relax stringent conditions for SMEs to access funding,” the association stated.

MAN raised concerns over the Central Bank of Nigeria’s (CBN) continuous hikes in the Monetary Policy Rate (MPR), which have driven the average interest rate on loans to manufacturers to 28.1% in the second half of 2023. This, according to the association, resulted in an estimated N341 billion in losses for the manufacturing sector during the period.

To alleviate these challenges, MAN urged the government to maintain the current excise duty of N10 per litre on non-alcoholic beverages, warning that further hikes could jeopardize the industry.

MAN also appealed to the government to address outstanding foreign exchange obligations, stating, “It is important for the government to direct the Central Bank of Nigeria to clear $2.4 billion in FX forward contracts to support manufacturers.” Additionally, the group advocated for a review of import duty rates on production inputs not available locally, suggesting a pegged rate of N800 to facilitate manufacturing competitiveness.

In its recommendations, MAN called for prioritising infrastructure development along key economic hubs through increased budgetary allocations and public-private partnerships. The association urged the Federal Government to streamline customs procedures using technology and decentralise seaport operations to improve efficiency.

Regarding electricity, MAN requested that the Nigerian Electricity Regulatory Commission (NERC) review high tariffs for Band A customers and enforce Naira-based pricing for gas supplied to manufacturers. “Transparency in tariff charges, infrastructure improvements by Distribution Companies, and the introduction of outage compensation mechanisms are essential,” the association noted.

MAN’s position underscores the urgent need for comprehensive policy reforms to bolster Nigeria’s manufacturing sector, which remains critical to the nation’s economic growth and development.

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