Nigerian Manufacturers Spend ₦1.34tn on Alternative Power in 2025

Manufacturers face rising costs from unreliable electricity supply

Nigerian manufacturers spent ₦1.34 trillion on alternative electricity sources in 2025 as unreliable grid supply forced factories to rely increasingly on generators and other off-grid solutions.

Data from the Manufacturers Association of Nigeria (MAN), reported by Housing TV Africa and corroborated by recent industry reporting, shows that manufacturers’ alternative power expenditure increased significantly as businesses sought to maintain production despite persistent electricity challenges.

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The rising cost highlights a structural problem for Nigeria’s industrial sector, where businesses must increasingly fund their own electricity in addition to paying for grid power.

Alternative Power Spending Continues to Rise

Manufacturers’ spending on alternative power has increased sharply over the past decade.

According to MAN data, expenditure rose from ₦25 billion in 2014 to ₦59 billion in 2015 and ₦129.95 billion in 2016. Although spending declined during some subsequent years, it began increasing rapidly from 2022.

Alternative power expenditure reached ₦144.5 billion in 2022, jumped to ₦781.7 billion in 2023 and exceeded ₦1 trillion in 2024 at ₦1.11 trillion.

The figure increased further to ₦1.34 trillion in 2025.

The latest figure represents roughly a 21 per cent increase from the previous year and demonstrates the growing financial burden of unreliable electricity on manufacturers.

Grid Reliability Remains a Major Concern

MAN said average daily power supply declined from 16.7 hours in the first half of 2025 to 13.1 hours in the second half.

The reduction has forced manufacturers to rely more heavily on self-generation to avoid production interruptions.

For factories operating continuously, power interruptions can result in equipment downtime, damaged materials, delayed orders and lower capacity utilisation.

Businesses therefore often have little choice but to maintain alternative power systems even when their operating costs rise substantially.

Manufacturers Increasingly Rely on Self-Generation

The growing reliance on alternative power has also changed the relationship between manufacturers and electricity distribution companies.

According to industry reporting, several major manufacturers have increasingly turned to gas, low-pour fuel oil (LPFO) and other sources to provide electricity for their production facilities.

Companies identified among those using significant self-generation capacity include Dangote, Flour Mills of Nigeria, Nigerian Breweries, Lafarge Africa, Nestlé Nigeria, Guinness Nigeria, Unilever Nigeria and several other major industrial operators.

The trend indicates that manufacturers are not simply using alternative power as a temporary backup. For some large industrial facilities, self-generation has become a core component of their electricity supply strategy.

High Energy Costs Increase Production Expenses

The cost of alternative electricity ultimately feeds into the cost of manufacturing goods.

Manufacturers must account for fuel, generator maintenance, spare parts, power infrastructure and technical personnel in addition to conventional electricity costs.

These expenses can reduce profit margins or force companies to increase product prices.

For consumers, higher production costs can contribute to more expensive goods and weaker purchasing power. For manufacturers, persistent energy costs can discourage expansion and reduce the resources available for investment in new factories and equipment.

This creates a wider economic challenge because manufacturing investment is closely connected to employment, supply chains and demand for industrial property.

Implications for Construction Materials

The energy challenge is particularly significant for Nigeria’s construction industry.

Manufacturers of cement, steel, aluminium, tiles, glass, paints and other building materials require substantial amounts of electricity to operate.

When these manufacturers face higher energy costs, some of the additional expense can eventually be reflected in the prices of construction materials.

That creates another layer of pressure for property developers already dealing with high land prices, financing costs, labour expenses and logistics costs.

Higher construction costs can ultimately increase the price of new homes and commercial properties.

Housing Development Could Face Additional Cost Pressure

The energy burden on manufacturers has a direct connection with Nigeria’s housing affordability challenge.

Developers depend on locally manufactured construction materials as well as imported products. If domestic manufacturers must spend more on electricity to maintain production, their operating costs can rise.

Developers may then face higher procurement costs, which can increase the overall cost of construction.

This is particularly challenging for affordable housing projects, where developers operate within tighter margins and have less ability to absorb increases in material prices.

A more reliable electricity supply could therefore have an indirect but important effect on housing affordability by reducing production costs throughout the construction-material supply chain.

Energy Infrastructure Could Influence Industrial Property Demand

The growing cost of grid electricity is also influencing where businesses locate their operations.

Industrial developers and manufacturers are likely to place greater importance on access to reliable energy infrastructure when selecting locations for factories and warehouses.

Industrial estates with dependable power, gas infrastructure and other utilities could become more attractive to manufacturers seeking to reduce their reliance on expensive diesel generation.

This could strengthen demand for well-serviced industrial property and encourage investment in developments that provide integrated power solutions.

Nigeria Needs More Reliable Power for Industrial Growth

The scale of manufacturers’ alternative power expenditure demonstrates the economic cost of an unreliable electricity system.

The country is not only losing productivity when factories experience power disruptions; businesses are also redirecting substantial capital towards generating electricity that could otherwise support production expansion, employment and investment.

Recent comments from International Energy Agency Executive Director Fatih Birol also highlight the scale of Nigeria’s wider energy investment opportunity. He said Nigeria could potentially double energy investment within five years, with opportunities across oil, gas and renewable energy.

Greater investment in generation, transmission, distribution and decentralised energy systems could therefore support both industrial competitiveness and broader economic growth.

Reliable Electricity Could Support Lower Construction Costs

For the housing sector, improved electricity supply could produce benefits across several stages of the development process.

Manufacturers would have greater capacity to produce building materials at lower operating costs, while construction companies could reduce their dependence on expensive generators at project sites.

Property developers could also benefit from more predictable operating expenses, making it easier to plan construction budgets and project timelines.

Over time, a more reliable power system could therefore contribute to moderating some of the cost pressures affecting Nigeria’s housing market.

Conclusion

Nigerian manufacturers’ ₦1.34 trillion expenditure on alternative power in 2025 underscores the significant economic cost of unreliable electricity supply.

The burden extends beyond manufacturing companies. Higher energy costs can affect the prices of construction materials, increase development costs and make affordable housing more difficult to deliver.

For Nigeria’s property and construction sectors, improving electricity reliability should therefore be viewed not only as an energy-sector priority but also as an important part of reducing development costs and strengthening industrial and housing investment.

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