Nigerian manufacturers spent approximately N1.35 trillion on alternative electricity generation in 2025, up from N1.11 trillion in 2024 as unreliable power supply continued to increase production costs and weaken industrial competitiveness.
The figures, disclosed by the Manufacturers Association of Nigeria (MAN), represent a 21.6% increase in expenditure within one year.
Despite investments in electricity infrastructure and ongoing reforms, many manufacturers continue to depend on diesel generators, gas-powered systems and other independent energy sources to sustain production.
The additional expenditure has become a major challenge for businesses already contending with high borrowing costs, expensive raw materials and pressure on consumer purchasing power.
For manufacturers, unreliable electricity creates financial obligations beyond the cost of purchasing fuel. Businesses must also maintain generators, replace equipment and invest in backup systems to prevent disruptions to production.
These expenses reduce the resources available for business expansion, recruitment and investment in modern machinery.
The challenge is particularly significant for small and medium-sized enterprises, many of which lack the financial capacity to establish independent electricity infrastructure.
While larger manufacturers may be able to spread energy expenses across higher production volumes, smaller businesses face greater difficulty absorbing additional costs without increasing prices.
The financial implications extend beyond individual companies.
Higher production expenses can weaken the competitiveness of locally manufactured goods against imported alternatives, particularly in industries where electricity represents a substantial share of operating costs.
Businesses involved in food processing, pharmaceuticals, consumer goods and other energy-intensive activities are especially exposed to interruptions in electricity supply.
The continued reliance on alternative power also raises questions about the effectiveness of Nigeria’s electricity reforms and the pace of infrastructure development.
Although the Electricity Act 2023 provides opportunities for greater private-sector participation and state-level electricity development, manufacturers continue to identify reliable and affordable power as a critical requirement for industrial growth.
The Federal Government has also identified energy availability as an important component of its industrial development agenda, with the objective of improving factory productivity, encouraging investment and expanding domestic manufacturing.
However, industry stakeholders maintain that sustainable improvements will depend on electricity supply becoming more predictable and commercially viable.
Beyond expanding generation capacity, attention is increasingly turning to transmission infrastructure, distribution efficiency and the availability of natural gas for electricity production.
For businesses, alternative energy technologies, including solar installations, battery storage and gas-powered generation, offer opportunities to reduce exposure to interruptions in grid supply.
Nevertheless, the initial investment required to deploy these systems remains a challenge, particularly for smaller manufacturers with limited access to affordable financing.
The N1.35 trillion expenditure underscores the scale of the financial resources being committed to keeping factories operational rather than expanding productive capacity.
Improving electricity reliability could allow manufacturers to redirect part of these resources towards equipment upgrades, employment, increased output and business expansion.
With Nigeria seeking to strengthen domestic production and reduce dependence on imported goods, addressing the cost of industrial electricity remains essential to improving the competitiveness of the manufacturing sector.