Industry stakeholders Nigeria have stressed the need for more reliable grid electricity and greater investment in alternative energy infrastructure to reduce manufacturers’ dependence on expensive diesel-powered generation.
This is as report revealed that Nigerian manufacturers spent an estimated N1.34tn on alternative electricity in 2025, as persistent power outages forced factories to increasingly depend on diesel generators, gas and other off-grid energy sources to keep production running.
Exclusive data from the Manufacturers Association of Nigeria (MAN) obtained by The PUNCH showed that spending on alternative power rose by about 21 per cent, from N1.11tn in 2024 to N1.34tn in 2025.
The sharp increase underscores the growing cost of Nigeria’s unreliable electricity supply to the industrial sector, with manufacturers increasingly bearing the expense of generating the electricity required to operate their plants.
MAN data showed that manufacturers’ spending on alternative electricity has risen dramatically over the past decade, despite fluctuations in some years.
Manufacturers spent N25bn on alternative power in 2014, rising to N59bn in 2015 and N129.95bn in 2016. The figure declined to N117.4bn in 2017, N93.11bn in 2018 and N61.38bn in 2019.
It rose to N81.91bn in 2020 before falling to N71.22bn in 2021.
However, alternative power expenditure began a steep increase in 2022, reaching N144.5bn. It surged to N781.7bn in 2023, crossed the N1tn mark at N1.11tn in 2024 and climbed further to N1.34tn in 2025.
Grid supply deteriorates
The rising cost comes amid worsening grid reliability.
MAN, led by its Director-General, Segun Ajayi-Kadir, said average daily electricity supply to manufacturers fell from 16.7 hours in the first half of 2025 to 13.1 hours in the second half.
The decline has forced many manufacturers to reduce their dependence on electricity distribution companies, popularly known as DisCos, and increasingly rely on gas, low-pour fuel oil and diesel-powered generation.
It was gathered that Industry observers warn that the development is placing additional pressure on companies already struggling with weak consumer purchasing power, high operating costs and shrinking profit margins.
Factories turn to self-generation
Several major industrial companies have invested heavily in independent power generation to reduce their exposure to grid disruptions.
Companies reported by the Nigerian Electricity Regulatory Commission to have moved towards self-generation or obtained permits for independent power operations include Flour Mills of Nigeria, Dangote Group, Cadbury Nigeria, Nigerian Breweries, Lafarge Africa, Procter & Gamble Nigeria, Seven-Up Bottling Company, Dangote Cement, Guinness Nigeria, Nestlé Nigeria, Unilever Nigeria, British American Tobacco Nigeria and Mikano International, among others.
NERC data showed that Pure Flour Mills Limited in Rivers State obtained a licence to generate 546 megawatts (MW) of electricity in 2025.
Other industrial power-generation capacities include 105MW by United Cement Company of Nigeria, 70MW by Flour Mills of Nigeria and 90MW by Lafarge Cement WAPCO Nigeria.
Dangote Industries Limited also generated about 1,500MW of electricity in 2025, according to its President, Aliko Dangote. The Dangote Refinery alone operates a 435MW power plant, a capacity that underscores the scale of electricity required by large industrial facilities.
An earlier survey by University of Ibadan economics professor, Adeola Adenikinju, estimated that Nigerian manufacturers self-generated about 13,223MW of electricity. Analysts believe the figure may have increased as more companies turn away from unreliable grid supply.
Power crisis forces factory closures
The electricity crisis has also contributed to the closure of some manufacturing businesses.
Louis Carter Industries, a plastics manufacturer, was said to be among companies that struggled with rising energy and raw-material costs.
“We had a major challenge with energy costs, which was quite unfortunate. We were also not getting the raw materials we needed,” the company’s General Manager, Ndubuisi Okoli, said.
Another example is Mothers Pride Ventures, a manufacturer of pet bottles, nylon and plastic cans in Asaba. The company operated for more than five years before shutting down in 2018 amid rising production costs.
Its Managing Director, Jimoh Dayo, attributed the closure partly to what he described as the poor performance of the Benin Electricity Distribution Company.
“The way DisCos are handling power is not the way it should be. They provide electricity to whoever they want,” he said, arguing that unreliable electricity contributed to the company’s collapse.
Experts call for urgent reforms
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, described electricity supply as one of the biggest constraints on industrial productivity.
“Power supply continues to be one of the most binding constraints on industrial productivity. Manufacturers are compelled to self-generate energy at enormous cost, undermining competitiveness and eroding profitability,” Yusuf said.
He argued that Nigeria would struggle to build a globally competitive manufacturing sector without reliable electricity, efficient transportation and affordable access to capital.
Yusuf called for deeper power-sector reforms, increased investment in rail infrastructure to reduce logistics costs and stronger development-finance institutions capable of providing long-term industrial funding at affordable rates.
Manufacturers have also taken legal action against some DisCos and the Nigerian Electricity Regulatory Commission over what they describe as arbitrary increases in electricity bills.
The introduction of Band A electricity tariffs has further increased the financial burden on manufacturers, with industry operators warning that rising electricity costs could force more factories to scale down operations or shut down.
Ajayi-Kadir said stabilising the economy, improving energy supply and expanding access to affordable financing would be essential to sustaining industrial growth.
However, he said stabilising macroeconomic conditions, improving energy supply, and ensuring access to affordable financing will be critical for sustaining growth and enhancing industrial productivity.
