Manufacturers spend N676bn on generators in six months over blackouts

The Manufacturers Association of Nigeria (MAN) has highlighted that manufacturers spent N676.6bn on alternative energy in the first half of 2025 due to blackouts and that despite the huge investment could still not meet their power needs due to the country’s unreliable and unaffordable electricity supply.

Director of the Research and Economic Policy Division, MAN, Dr Oluwasegun Osidipe, in presenting its Manufacturing State of Affairs October 2025 report, highlighted the energy woes that still plague the sector despite a drop in alternative energy costs in the first six months of the year. The October report also contained the latest Manufacturers’ CEOs Confidence Index, (MCCI).

The MAN report read: “Though lower, alternative energy costs of N676.6bn and raw material imports of N1.72tn in H1 2025 remain a heavy burden on operational costs and employment, with 18,935 job losses recorded in the same period.”

The cost of alternative energy fell from N708.1bn recorded in the second half of 2024. Still, MAN insisted that the burden remained unsustainable for manufacturers already battling rising inflation, high interest rates and increased production costs.

According to the October MCCI, inadequate power supply and the high cost of electricity and alternative energy ranked among the biggest operating constraints for manufacturers in the third quarter of 2025.

A former Vice President of MAN, John Aluya, was quoted in a report to have affirmed that manufacturers continue to struggle with energy shortages in their houses and factories and everywhere in the past two months.

Aluya said, “Alternative energy at the moment is not meeting our production needs, because for you to get alternative energy, you have to invest first.”

He opined that solar power remained inadequate for industrial-scale production, as it required extensive land and substantial capital input that ultimately inflated production costs.

According to him, “Solar demands may be 700 kilowatts; that is the maximum they are doing, about 750 watts. And to get one megawatt, you need the whole acre of land… What will the investment cost? It is huge. And when you invest in such a thing, where does it go? It goes to your production costs. And that is what makes our manufacturing not competitive in Nigeria.”

He contended that manufacturers in other countries operated in environments where basic infrastructure was already guaranteed, unlike Nigeria, where companies must generate their own power, water and logistics support.

Aluya also urged the government to intervene in energy pricing, noting that no country allowed energy consumption to be determined solely by market forces.

He warned that the N676.6bn spent on alternative energy would “go higher” unless urgent reforms were implemented.

MAN stated in its recommendations, that the Federal Government should “expand embedded generation and industrial cluster power projects using gas and renewable mini-grids, ensuring manufacturers get reliable, affordable off-grid electricity.”

Recall, in 2024 that MAN opposed a 250 per cent tariff hike proposed by the Nigerian Electricity Regulatory Commission, (NERC) and cautioned that such a steep increase would cripple the manufacturing sector.

The Director-General of MAN, Segun Ajayi-Kadir, mni had said electricity remained a critical but inefficiently supplied input for manufacturers.

DG MAN argued that power costs had risen astronomically, adding, “No manufacturer can competitively produce in that kind of environment.”

He emphasized that MAN had proposed a more manageable 100 per cent tariff increase, adding, “We have indicated that a 100 per cent increase would have been tolerable. And this is for power that is inefficiently generated and run.”

Although the association filed a lawsuit against NERC and electricity distribution companies, in April 2024, alleging an unsustainable tariff regime, the Federal High Court dismissed the suit, labelling it an abuse of court process on October 7.

Despite the defeat, MAN continues in its advocacy to warn that Nigeria’s uncompetitive electricity environment remains a threat to industrial survival and job creation.

The Chairman of the Pan-African Manufacturers Association (PAMA), Engr. Mansur Ahmed, has also maintained that multiple national grid collapses and daily power outages have crippled industries, disrupted manufacturing operations and raised production costs for companies who have been forced to turn to costly diesel generators to stay afloat.

Ahmed emphasized that until significant reforms are made, Nigeria’s power crisis would continue to hinder economic and business growth, adding “Backup generation, often the main alternative to grid electricity, remains prohibitively expensive for industries.”

According to a World Bank study, “factories across the continent spend around $0.47 per kWh on self-generated power, nearly three times higher than the grid tariff in countries like Nigeria. Unsurprisingly, over 80 per cent of firms in Nigeria rely on diesel generators; this is unsustainable.”

Despite the assertion by the Minister of Power, Adebayo Adelabu, that Nigeria’s installed generation capacity increasing from 13GW to 14GW and achieving an all-time generation peak of 5,801.44MW, which is hampered by load rejection by distribution companies currently driving down supply to about 5,000MW, experts have faulted the calculations of the minister of power.

The experts opined that no meaningful investment has been made to stabilize the fragile grid and that when this is done the national load demand of about 10,000-20,000MW can be absorbed locally, adding “key priorities should include infrastructure expansion and grid strengthening; market reforms and pricing; industrial energy policy integration; private sector engagement and financing and renewable and decentralised solutions.”