Nigerian manufacturers are diverting resources from production to power generation as skyrocketing energy costs and unreliable electricity supply place additional pressure on manufacturing activities; the Manufacturers Association of Nigeria (MAN) has raised alarm.
Energy accounted for over 40 per cent of manufacturing costs in the country, while manufacturers spent about N1.11 trillion on alternative power generation in 2024. The amount rose to approximately N1.35 trillion in 2025, according to MAN.
Speaking at the 2026 Manufacturers Energy Security and Energy Efficiency Summit in Lagos, Chair, Keystone Bank and MAN Regional Chairman, South East, Dr Adaora Chukwudozie, said manufacturers are being forced to make difficult choices between purchasing energy and buying raw materials, maintaining equipment and meeting payroll, as well as absorbing higher costs and passing them on to consumers.
She said manufacturers cannot simply transfer every increase in electricity tariffs, diesel, gas and alternative energy costs to consumers because purchasing power remains constrained and imported alternatives dominate in the market.
She identified reliability as another major challenge, saying manufacturers needed electricity when required, at the quality required and for as long as their production processes demanded. ”For many industrial processes, a power interruption costs far more than the period of darkness itself,” she said.
She explained that power interruptions could waste energy already used to heat equipment, build pressure or bring machinery to operating condition, while also resulting in lost raw materials, equipment stress and the need to restart production.
The situation, she said, has increasingly turned manufacturers into power companies, requiring them to invest in and manage generators, transformers, gas and multiple energy sources alongside their factories.
She said the additional energy investment also complicated expansion because manufacturers had to consider how to power new production lines, beyond the cost of machinery, buildings and working capital.
“Every expansion of production must now be accompanied by a corresponding investment in power,” she said.
MAN president, Dr Ifeanyi Okoye, also described high electricity tariffs, erratic grid supply and heavy reliance on fossil fuels as factors making industrial production difficult. He said manufacturers are keeping factories open amidst extremely difficult conditions and their resilience has limits.
He called for electricity distribution companies to be held accountable when they fail to deliver the 20-hour daily supply obligation under Band A, urging regulators to consider sanctions or compensation for affected factories.
In response to the challenges, MAN said it is advancing the Industrial Energy Cost Reduction and Adoption Programme through its Manufacturers Power Development Company Limited (MPDCL), working with GIZ and the Nigerian Energy Support Programme. The programme will bring together factory solar installations, battery energy storage systems, captive natural gas options and smart energy management networks to provide energy solutions for manufacturers.
Chukwudozie said the approach would begin with assessing individual factories rather than recommending the same technology to every manufacturer. The assessment, she said, would consider each factory’s production process, energy load and requirements before an appropriate solution was designed.
She disclosed that the programme had commenced a pilot in the Southeast, with engagements involving manufacturers, including Innoson Vehicle Manufacturing and Cutix PLC.
She also identified a proposed 1.5-megawatt project as a proof of concept, with projected energy cost savings of more than 50 per cent. She stressed that the savings were projected and that actual results would have to be established through measured operating performance.
Under the proposed arrangement, a long-term financing partner would provide the initial investment for the energy infrastructure, allowing the manufacturer to preserve working capital for raw materials, salaries, machinery and production.
Chukwudozie said smart metering, remote monitoring and an energy dashboard would help manufacturers track consumption, energy generated by the new system and savings achieved.
