Nigeria’s manufacturers spent a staggering N1.34tn on alternative electricity in 2025 as worsening power supply pushed factories deeper into self-generation to keep production lines running.
The latest figure, obtained from data compiled by the Manufacturers Association of Nigeria, represents a 21 per cent increase from the N1.11tn spent by manufacturers on alternative power in 2024.
The sharp rise in energy costs is adding to the financial pressures confronting the industrial sector, where companies are already battling high input costs, weak consumer demand, expensive logistics and rising financing costs.
MAN data showed that manufacturers’ dependence on alternative power has grown dramatically over the past decade.
In 2014, manufacturers spent about N25bn on alternative electricity. The expenditure rose to N59bn in 2015 and N129.95bn in 2016 before falling to N117.4bn in 2017.
It declined further to N93.11bn in 2018 and N61.38bn in 2019, before rising to N81.91bn in 2020. Spending dropped again to N71.22bn in 2021.
The situation changed sharply from 2022, when alternative power expenditure climbed to N144.5bn. It then surged to N781.7bn in 2023, crossed the N1tn threshold in 2024 and reached N1.34tn last year.
MAN said the rising cost was occurring alongside a deterioration in grid reliability.
“Grid reliability deteriorated significantly, with daily power supply dropping from 16.7 hours in H1 2025 to just 13.1 hours in H2 2025,” the association, led by Segun Ajayi-Kadir, said.
The decline in supply has encouraged a growing number of industrial users to reduce or completely abandon their dependence on electricity distribution companies for critical production activities.
Findings showed that several large manufacturers have increasingly turned to gas, low-pour fuel oil and other captive power sources to avoid production losses caused by unexpected outages.
Companies identified by the Nigerian Electricity Regulatory Commission as operating or deploying significant self-generation capacity include Flour Mills of Nigeria, Dangote Group, Cadbury, Haffar, Kam Industries, Nigerian Breweries, Lafarge Africa, Procter & Gamble Nigeria, Bank of Industry, Seven-Up Bottling Company, Dangote Cement, Lekki Port LFTZ Enterprise, Guinness Nigeria, Nestle Nigeria and Aluminium Smelter Company of Nigeria.
Others include De-United Foods Industries, Sagamu Steel Nigeria, British American Tobacco Nigeria, Unilever Nigeria, Total E&P Nigeria and Mikano International.
The scale of the shift is also reflected in the licences granted to manufacturers to generate their own electricity.
NERC data showed that Pure Flour Mills Limited in Rivers State received approval in 2025 to generate 546 megawatts. United Cement Company of Nigeria has a 105MW generation capacity, Flour Mills of Nigeria 70MW, while Lafarge Cement Wapco Nigeria has 90MW.
Dangote Industries alone generated about 1,500MW in 2025, according to its President, Aliko Dangote. Its refinery in Lagos operates a 435MW power plant, a capacity described as sufficient to meet the entire power requirement of the Ibadan Electricity Distribution Company at the time.
An earlier study by University of Ibadan economics professor, Adeola Adenikinju, estimated that manufacturers were generating about 13,223MW of their own electricity.
Industry analysts believe the figure could now be considerably higher as more companies seek alternatives to grid power.
For some manufacturers, however, the cost of keeping generators and other energy systems running has contributed to the collapse of businesses.
Louis Carter Industries, a plastic manufacturing company, was among firms that shut down after struggling with high 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.
Mothers Pride Ventures, a manufacturer of pet bottles, nylon and plastic cans in Asaba, also ceased operations after more than five years in business.
The company shut down in 2018 after its operating costs became unsustainable.
Its Managing Director, Jimoh Dayo, blamed the company’s collapse partly on what he described as unreliable electricity supply from 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. The privatisation of the power sector (in 2013) should not have been done. Lack of power supply from them destroyed our business,” he said.
The increasing cost of electricity has also triggered disputes between manufacturers, DisCos and the Nigerian Electricity Regulatory Commission, with manufacturers challenging what they consider arbitrary increases in electricity charges.
The introduction of the Band A tariff structure has further increased operating costs for companies that require more reliable electricity, with manufacturers warning that continued increases could force more factories to close.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, said unreliable electricity remained one of the biggest obstacles to industrial growth.
“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 could not build a globally competitive manufacturing base without addressing the country’s energy and infrastructure deficits.
“No manufacturing economy can achieve global competitiveness when power is unreliable, logistics are inefficient and capital is prohibitively expensive,” he added.
Yusuf called for sustained investment in the power sector, rail infrastructure and industrial financing, saying reliable electricity would reduce production costs while improved transport infrastructure would ease logistics expenses.
“Power sector reforms must deliver reliable and affordable electricity. Investments in rail infrastructure must be accelerated to reduce logistics costs. Development finance institutions should be strengthened to provide long-term industrial financing at concessionary rates,” he said.
Ajayi-Kadir similarly warned that sustained industrial growth would depend on improvements in the wider economic environment.
“Moving forward, stabilising macroeconomic conditions, improving energy supply, and ensuring access to affordable financing will be critical for sustaining growth and enhancing industrial productivity,” he said.
With manufacturers now spending more than N1tn annually on alternative electricity, the figures underline the growing cost of unreliable grid power to Nigeria’s industrial economy and the urgent need for a more dependable and affordable electricity supply.
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