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.

The post Blackouts: Nigerian Manufacturers Spend N1.34tn on Alternative Power appeared first on Housing TV Africa.

Nigeria’s manufacturing sector continued to face prohibitively expensive credit in 2025, with the average interest rate on industrial loans standing at 32.1 per cent.

Although the figure represented an improvement from the 35.6 per cent average recorded in 2024, borrowing costs remained too high to support sustainable industrial expansion and long-term investment.

Data from the Manufacturers Association of Nigeria showed that the average lending rate was 32.5 per cent during the first half of 2025 before declining slightly to 31.8 per cent in the second half.

Despite the moderation, every major manufacturing segment surveyed by MAN recorded an average borrowing rate above 30 per cent.

Chemical and pharmaceutical manufacturers faced the lowest annual average rate at 30.4 per cent, followed by wood, furniture and related producers at 30.8 per cent.

Manufacturers of textiles, clothing, carpets, leather and footwear obtained loans at an average rate of 31.6 per cent.

Metal, iron, steel and fabricated-metal producers paid an average of 32.3 per cent, while electrical and electronics manufacturers faced a rate of 32.4 per cent.

The average borrowing rate for food, beverage and tobacco companies stood at 32.5 per cent. Plastic, rubber and foam manufacturers paid 32.6 per cent.

Motor vehicle and miscellaneous assembly companies recorded an average lending rate of 32.8 per cent. The pulp, paper, printing, publishing and packaging sector faced the same rate.

Non-metallic mineral-product manufacturers recorded the highest average borrowing cost at 33 per cent.

The high rate in the non-metallic mineral sector could have direct implications for Nigeria’s housing and construction industries because the segment produces important building inputs, including cement, ceramics, glass, tiles and related materials.

When manufacturers finance production, machinery, raw materials and expansion at interest rates above 30 per cent, part of the cost may eventually be transferred to consumers through higher product prices.

Elevated borrowing costs can also discourage companies from increasing capacity, upgrading equipment or developing new factories. This could further weaken local production and increase dependence on imported goods.

MAN attributed the slight reduction in lending rates during 2025 to improving economic conditions, including lower headline inflation, greater stability in energy prices and the appreciation of the naira.

However, the association maintained that the cost of credit remained a serious obstacle to manufacturing competitiveness and output growth.

Manufacturers require financing to purchase raw materials, maintain equipment, meet working-capital obligations and expand production. At prevailing commercial lending rates, many businesses may struggle to generate returns sufficient to cover their financing costs.

The situation is particularly concerning for small and medium-sized manufacturers, which generally have fewer financing options and weaker balance sheets than large corporations.

The figures suggest that Nigeria must move beyond modest reductions in commercial lending rates and develop more accessible, long-term industrial finance for productive sectors.

Without affordable credit, efforts to increase local manufacturing, reduce building-material costs, create jobs and improve the competitiveness of Nigerian products could remain constrained.

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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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