Nigerian manufacturers spent an estimated ₦1.34 trillion on alternative energy sources in 2025 despite a decline in diesel prices driven by improvements in domestic refining capacity, underscoring the country’s persistent power supply challenges.
The Manufacturers Association of Nigeria (MAN) disclosed the figure in its assessment of the impact of recent economic reforms on the manufacturing sector. The association also reported that manufacturers experienced a 40 per cent increase in operational costs during the first half of 2026, despite signs of improving macroeconomic conditions.
According to MAN, although increased local refining capacity particularly following the expansion of domestic petroleum refining has helped moderate diesel prices, unreliable electricity supply continues to compel manufacturers to rely heavily on self-generated power using diesel, gas and other alternative energy sources.
The association said expenditure on alternative energy rose sharply from ₦1.11 trillion in 2024 to approximately ₦1.34 trillion in 2025, reflecting the growing financial burden of powering factories outside the national grid. It noted that energy accounts for a significant share of manufacturers’ production costs.
MAN Director-General, Segun Ajayi-Kadir, said the economic reforms introduced by the Federal Government including fuel subsidy removal, exchange rate liberalisation, electricity tariff adjustments and tight monetary policy have reshaped the operating environment for manufacturers. While acknowledging that the reforms are aimed at addressing long-standing structural challenges, he said the industrial sector has borne a disproportionate share of the adjustment costs.
The association warned that although diesel prices have eased, manufacturers continue to grapple with erratic grid electricity, high borrowing costs, foreign exchange volatility and rising logistics expenses. These factors, it said, contributed to the 40 per cent increase in operational costs recorded during the first half of 2026.
MAN urged the Federal Government to accelerate reforms in the power sector by improving electricity generation, transmission and distribution while implementing policies that support industrial competitiveness. It also called for tax reforms, better transport infrastructure and improved access to affordable financing to ease the cost of doing business.
Industry stakeholders say reducing manufacturers’ dependence on alternative energy remains critical to boosting productivity, lowering production costs and enhancing the competitiveness of locally produced goods. They argue that sustained improvements in electricity supply would significantly reduce operating expenses and strengthen Nigeria’s manufacturing sector.
