Nigerian Factories Spend ₦1.34tn on Alternative Power as Blackouts Push Manufacturers Away From DisCos

By Iroyin Yoruba Television News Desk

Nigerian manufacturers spent an estimated ₦1.34 trillion on alternative electricity sources in 2025, as persistent power shortages forced factories across the country to increasingly depend on diesel generators, gas-powered systems, low-pour fuel oil and other independent electricity arrangements to keep their production lines running.

The latest figure represents a sharp increase from the ₦1.11 trillion manufacturers spent on alternative power in 2024, meaning expenditure rose by about 21 per cent in one year.

The scale of the spending has renewed concerns about the cost of unreliable electricity to Nigeria's industrial economy, with manufacturers increasingly being forced to pay twice for power: once through the formal electricity system and again through their own generation arrangements when grid electricity is unavailable or insufficient.

Data from the Manufacturers Association of Nigeria show that the cost of alternative electricity has risen dramatically over the past decade.

Manufacturers spent only about ₦25 billion on alternative power in 2014.

By 2015, the figure had increased to ₦59 billion, while spending reached approximately ₦129.95 billion in 2016.

Although expenditure fell during the following three years, the trend eventually reversed dramatically.

Alternative-power spending stood at about ₦81.91 billion in 2020 and ₦71.22 billion in 2021.

It then surged to ₦144.5 billion in 2022, jumped to ₦781.7 billion in 2023 and crossed the ₦1 trillion mark in 2024.

By 2025, manufacturers were spending ₦1.34 trillion.

The figures provide a stark picture of the financial burden created by electricity shortages and raise questions about whether Nigerian manufacturing can become globally competitive while factories remain heavily dependent on self-generation.

A Decade of Rising Energy Costs

The movement from ₦25 billion in alternative-power expenditure in 2014 to ₦1.34 trillion in 2025 represents an extraordinary increase.

The rise is not simply a result of more factories buying generators.

It reflects a combination of factors affecting Nigeria's industrial sector.

Fuel prices have increased substantially over the period.

Diesel, which remains one of the most common fuels used by industrial generators, has become significantly more expensive.

Maintenance costs have also increased.

Generators require servicing, replacement parts, lubricants and skilled technicians.

Large industrial facilities may operate several generators simultaneously because the electricity required to power factories can be enormous.

The cost therefore extends beyond the purchase of fuel.

There is also the cost of transporting fuel, storing it safely, maintaining generation equipment and dealing with breakdowns.

When all these expenses are combined, alternative electricity can become one of the largest operating costs for a factory.

Manufacturers then have to recover those costs through the prices of their products.

This can make locally manufactured goods more expensive.

Why Manufacturers Are Turning Away From DisCos

Manufacturers have traditionally depended on electricity distribution companies for grid power.

However, unreliable supply can be particularly damaging to industrial production.

A factory cannot easily stop and restart production every time electricity disappears.

Some industrial processes require continuous electricity.

An unexpected outage can damage machinery, interrupt production, spoil raw materials or create significant safety risks.

For businesses producing food, beverages, chemicals, plastics, metals and other goods, interruptions can also result in material losses.

Manufacturers have therefore increasingly sought greater control over their electricity supply.

According to information from the power sector, several major industrial companies have moved towards gas, low-pour fuel oil and other forms of self-generation.

The list includes major manufacturers and industrial operators across sectors.

This development represents an important change in the relationship between manufacturers and electricity distribution companies.

Rather than depending entirely on the grid, companies are increasingly building their own energy systems.

The Cost of Running a Factory on Generators

Running a generator for a small business is already expensive.

For a large factory, the cost can be enormous.

Industrial generators can consume large volumes of fuel.

A factory operating continuously may need thousands of litres of fuel.

If production runs for several shifts, the energy bill can become a major component of operating costs.

The factory must also maintain backup systems.

Many manufacturers cannot afford to have a single generator because a mechanical failure could bring production to a complete halt.

They therefore maintain multiple units.

Some facilities operate generators while the grid is available and keep others ready for emergencies.

This provides reliability but increases capital and maintenance costs.

The alternative-power expenditure recorded by manufacturers therefore represents much more than fuel purchases.

It reflects the broader infrastructure companies have built to compensate for weaknesses in public electricity supply.

Grid Supply Hours Have Fallen

The manufacturers' association reported a significant deterioration in grid reliability during 2025.

According to its data, average daily electricity supply fell from 16.7 hours in the first half of 2025 to 13.1 hours in the second half.

That represents a major reduction for factories operating production lines that require continuous power.

A factory receiving electricity for 13 hours a day cannot simply assume that the remaining 11 hours will be irrelevant.

Production schedules may have to be rearranged.

Generators must cover the gaps.

Workers may have to operate outside normal hours.

Equipment may need to be shut down and restarted.

Some businesses may decide that operating continuously is no longer financially viable.

The reduction in supply hours therefore has implications that extend beyond the electricity bill.

It affects productivity.

Manufacturers Are Building Their Own Power Plants

Some of Nigeria's largest industrial companies have gone beyond ordinary diesel generators.

They have developed substantial independent electricity-generation capacity.

According to available regulatory information, some manufacturers have obtained licences or approvals to generate hundreds of megawatts.

Pure Flour Mills in Rivers State, for example, received approval for a generation capacity of 546 megawatts.

Other industrial operators also maintain significant generation capacity.

United Cement Company of Nigeria has reported generation capacity of 105MW.

Flour Mills has capacity of about 70MW.

Lafarge Cement WAPCO has about 90MW.

These figures demonstrate how far some industrial companies have moved into power generation.

They are no longer simply purchasing electricity as a service.

They are becoming energy producers themselves because their manufacturing operations depend on reliable electricity.

Dangote's Massive Self-Generation Capacity

One of the most significant examples is the Dangote industrial group.

According to figures cited in the latest discussion, Dangote Industries generated approximately 1,500 megawatts of electricity in 2025.

The Dangote refinery alone has a 435MW power plant.

That capacity is enormous when compared with the electricity needs of many Nigerian cities and distribution areas.

The refinery's power plant could reportedly meet the total electricity requirement of an entire distribution company territory under the comparison cited in the report.

The investment reflects the enormous amount of energy required by modern industrial facilities.

A refinery cannot depend on an unstable power supply if it is expected to operate continuously.

Its operations involve sophisticated equipment, pumps, control systems, safety mechanisms and processing units.

A major electricity interruption can create significant operational risks.

Why Power Matters So Much to Manufacturing

Electricity is not simply another expense for manufacturers.

It is a fundamental production input.

Factories use electricity to operate machinery.

It powers motors, pumps, compressors, conveyor systems, cooling systems, lighting, control systems and computers.

For food manufacturers, electricity is needed for refrigeration.

For steel producers, energy consumption can be extremely high.

For cement factories, large industrial machines require substantial power.

For plastic manufacturers, electricity is needed to operate moulding and processing equipment.

For pharmaceutical companies, controlled production environments and refrigeration depend on reliable electricity.

For textile companies, machinery cannot operate without energy.

When electricity is unreliable, therefore, manufacturing becomes more expensive.

The Effect on Product Prices

Manufacturers do not operate in isolation.

When their operating costs rise, those costs can eventually affect consumers.

A factory spending hundreds of millions of naira on diesel cannot absorb every increase indefinitely.

Some of the additional cost may be reflected in product prices.

This can contribute to inflation.

Consumers then face higher prices for locally produced goods.

The problem becomes particularly serious when households are already struggling with reduced purchasing power.

A manufacturer facing expensive electricity may raise prices.

Consumers facing higher prices may reduce their purchases.

The manufacturer then experiences lower sales.

This can create a difficult cycle.

High energy costs therefore have implications not only for factories but also for household budgets.

The Competitiveness Problem

Nigeria's manufacturing sector competes with producers in other countries.

Manufacturers elsewhere may benefit from more reliable electricity.

If a Nigerian factory spends a substantial portion of its revenue generating electricity while a competitor abroad receives more stable grid power, the Nigerian producer may have a cost disadvantage.

This affects exports.

A Nigerian manufacturer trying to sell products internationally must compete on price, quality and reliability.

If electricity costs make the Nigerian product significantly more expensive, international buyers may choose alternatives.

The same problem applies domestically.

Imported products can sometimes become cheaper than locally manufactured goods if local production costs rise too high.

This creates a difficult situation for Nigeria because the government wants to encourage domestic manufacturing and reduce excessive dependence on imports.

The Risk of Factory Closures

The consequences of poor electricity supply can eventually become severe enough to force factories to close.

Several Nigerian manufacturing businesses have previously shut down after struggling with high production costs.

One example cited in the latest report is Louis Carter Industries, a plastic manufacturing company.

The company's management attributed its closure to high energy costs and problems obtaining raw materials.

Another example is Mothers Pride Ventures in Asaba.

The company produced plastic bottles, nylon and related products for several years before shutting down amid high operating costs.

When a factory closes, the consequences go beyond the owners.

Workers lose jobs.

Suppliers lose customers.

Transport operators lose business.

Local governments lose economic activity.

Communities lose purchasing power.

Banks may face problems recovering loans.

Customers may have fewer locally produced options.

This is why electricity reliability is ultimately an economic development issue.

Manufacturing Jobs Are at Stake

Nigeria has a large young population and needs to create millions of productive jobs.

Manufacturing can provide employment across different skill levels.

Factories require engineers, technicians, drivers, accountants, administrators, security workers, machine operators, cleaners, logistics personnel and other employees.

A growing manufacturing sector can therefore create employment directly and indirectly.

But manufacturing companies cannot create sustainable jobs if production costs remain too high.

When a factory is struggling to pay its electricity bill, management may freeze recruitment.

When costs continue rising, workers may be laid off.

When losses become unsustainable, the factory may close.

Reliable electricity is therefore part of Nigeria's employment strategy.

The Burden on Small and Medium-Sized Manufacturers

The problem is even more difficult for small and medium-sized manufacturers.

Large corporations may have enough capital to build dedicated power plants.

Smaller companies often cannot.

A small factory may depend on one or two generators.

If the generator breaks down, production stops.

If diesel prices increase, the company's operating costs rise immediately.

Small manufacturers also have less bargaining power when purchasing fuel and equipment.

They may therefore pay higher prices.

Some businesses respond by reducing production hours.

Others increase product prices.

Some simply leave the manufacturing sector.

The effect is particularly important because small and medium-sized enterprises form a significant part of Nigeria's economy.

Alternative Energy Is Becoming More Attractive

The crisis is also encouraging businesses to consider alternatives to diesel.

Gas-powered generation is one option.

Solar power and battery storage are another.

Hybrid systems can combine solar energy, batteries, gas generators and grid electricity.

These technologies can reduce dependence on diesel, although their initial costs can be significant.

For companies with suitable rooftops or large industrial land areas, solar systems can provide part of their daytime electricity demand.

Battery storage can then help manage fluctuations.

However, large-scale manufacturing requires substantial amounts of electricity.

Solar systems alone may not always be sufficient.

The most practical approach for some companies may therefore be a combination of different energy sources.

The Solar Opportunity

Nigeria has significant solar potential.

The country receives substantial sunlight throughout much of the year.

This creates an opportunity to diversify the electricity supply.

Manufacturers could use solar energy during daylight hours and other generation systems when solar output falls.

However, industrial solar installations require substantial upfront investment.

Businesses must purchase panels, inverters, batteries, transformers and related infrastructure.

They also need technical expertise to design and maintain the systems.

Government policies could help encourage investment by making financing available and establishing predictable regulatory frameworks.

If industrial solar deployment increases, it could reduce dependence on diesel.

Gas as a Transitional Option

Natural gas is another important option for Nigerian manufacturers.

Nigeria has significant gas reserves.

Using gas for industrial electricity generation can potentially reduce fuel costs compared with diesel in suitable circumstances.

However, gas-based power also depends on reliable infrastructure.

Factories need access to gas pipelines or other supply arrangements.

Pipeline disruptions can affect production.

Gas prices and transportation costs can also influence the economics.

The long-term goal should therefore be a diversified energy system rather than replacing one dependency with another.

What Manufacturers Want From Government

Manufacturers have consistently called for improvements in electricity reliability.

They also want more predictable electricity pricing.

Uncertainty makes business planning difficult.

If a manufacturer does not know how much electricity will cost next month, it becomes harder to calculate production costs and determine product prices.

Industry stakeholders have also called for investment in transmission and distribution infrastructure.

Nigeria's electricity challenges do not come from a single problem.

Generation, transmission and distribution all matter.

More electricity can be generated, but if transmission infrastructure cannot carry it to demand centres, consumers may not receive the benefit.

Likewise, stronger transmission capacity is not enough if distribution infrastructure remains weak.

The Transmission Problem

Nigeria's electricity network has experienced constraints that can limit how much power moves from generating plants to consumers.

Transmission infrastructure requires continuous investment.

Lines, transformers and substations need maintenance and expansion.

Industrial clusters require reliable supply because factories often consume large amounts of electricity.

Where transmission capacity is insufficient, generation can remain underutilised.

This creates an unusual situation in which the country may have available generating capacity but still experience inadequate electricity supply.

Solving the crisis therefore requires coordinated investment across the entire electricity chain.

The Distribution Challenge

Distribution companies are responsible for delivering electricity to end users.

Manufacturers have raised complaints about supply quality, billing and reliability.

Some industrial companies have chosen to reduce their dependence on distribution companies because they believe self-generation provides greater control.

However, a large-scale migration away from the grid also raises questions about the future of Nigeria's electricity market.

If major industrial consumers increasingly generate their own electricity, distribution companies could lose some of their largest customers.

That could affect the economics of the distribution system.

At the same time, manufacturers cannot reasonably be expected to remain dependent on unreliable electricity if their businesses are at risk.

The solution must therefore address the underlying reliability problem.

The Band A Challenge

The introduction and expansion of higher electricity service categories have also affected manufacturers.

Band A customers are expected to receive significantly more electricity supply than customers on lower bands.

But higher service expectations can also involve higher tariffs.

Manufacturers have argued that increased electricity costs can become difficult to absorb if the promised supply is not consistently delivered.

If a factory pays more for electricity but still needs to run generators frequently, the intended benefit of the tariff structure becomes questionable from the manufacturer's perspective.

This is why reliability and affordability must be considered together.

The Financial Pressure on Factories

Electricity is only one of many costs facing Nigerian manufacturers.

Companies also have to purchase raw materials.

They must pay workers.

They face transportation and logistics expenses.

They pay taxes and regulatory fees.

They need financing to purchase equipment and expand operations.

Interest rates can increase the cost of borrowing.

Inflation can raise the price of inputs.

Consumer purchasing power can weaken demand.

When electricity costs are added to these pressures, profit margins can become extremely thin.

Manufacturers therefore have limited room to absorb additional costs.

The View From Economic Analysts

Economist and private-sector advocate Muda Yusuf described electricity supply as one of the major constraints on industrial productivity.

His argument is that manufacturers cannot compete internationally when they must generate expensive electricity themselves while also dealing with high logistics and financing costs.

This is a broader economic issue.

Industrial competitiveness depends on several interconnected factors.

Electricity is one.

Transport infrastructure is another.

Access to affordable capital is another.

Raw-material availability, taxation, regulatory efficiency and consumer demand also matter.

Improving electricity without addressing these other areas may help, but it will not solve every problem facing manufacturers.

The Need for Long-Term Financing

Manufacturers also require access to affordable long-term financing.

Power infrastructure is expensive.

A factory considering a gas plant, solar installation or other generation system may need substantial capital.

Commercial loans with high interest rates can make such investments difficult.

Development finance institutions can potentially provide longer-term funding at more favourable rates.

Such financing can allow companies to invest in energy infrastructure while spreading the cost over several years.

This could reduce reliance on expensive short-term borrowing.

The Role of Development Finance Institutions

Government-backed financial institutions have an important role to play in industrial development.

They can provide financing for machinery, energy infrastructure and factory expansion.

If financing is available for clean-energy systems, manufacturers may be able to reduce their dependence on diesel.

Such programmes could also support local companies producing solar panels, batteries, inverters, transformers and other energy equipment.

That would create a second benefit.

Instead of simply importing energy technology, Nigeria could develop a domestic manufacturing ecosystem around the energy transition.

The Opportunity for Local Manufacturing

Nigeria's electricity crisis has created a potential market for local energy equipment manufacturers.

Demand is increasing for generators, solar systems, batteries, inverters, transformers and other equipment.

If government policies encourage local production, Nigerian manufacturers could supply part of this market.

This could create jobs.

It could reduce import dependence.

It could build technical expertise.

It could also strengthen Nigeria's ability to respond to future energy challenges.

However, local manufacturers themselves need reliable electricity.

The irony is clear.

A factory producing power equipment needs electricity to manufacture that equipment.

If energy costs remain high, the equipment may become more expensive.

A Manufacturing Sector Under Pressure

The ₦1.34 trillion figure should therefore be understood as a warning about the broader condition of Nigerian industry.

It represents money that could potentially have been invested in new factories, additional workers, research, machinery and expansion.

Instead, a substantial amount has gone into keeping existing production systems powered.

Not all alternative-power spending is necessarily wasteful.

Investing in efficient gas plants or renewable systems can have long-term benefits.

But the sheer scale of spending demonstrates how much responsibility has shifted from the public electricity system to individual businesses.

Manufacturers are effectively building parallel power infrastructure because they cannot afford to stop producing.

What Happens When Power Improves?

If Nigeria succeeds in significantly improving grid reliability, manufacturers could potentially reduce their dependence on self-generation.

That would free capital for other purposes.

Companies could invest more in machinery.

They could hire more workers.

They could lower production costs.

Some savings could eventually reach consumers through lower prices.

Export competitiveness could improve.

Factories could operate more efficiently.

The benefits would extend throughout the economy.

This is why electricity reform is not merely an energy-sector issue.

It is also an industrial policy, employment policy and economic-growth issue.

The Link Between Electricity and Inflation

Energy costs can contribute to inflation in several ways.

When factories spend more on electricity, their production costs increase.

They may raise prices.

Transport operators may also increase charges because fuel and energy costs rise.

Retailers then face higher wholesale prices.

Consumers ultimately pay more.

If businesses cannot increase prices because consumers are already struggling, their profit margins shrink instead.

They may respond by reducing workers, reducing production or closing.

Therefore, stable electricity can help reduce cost pressures throughout the supply chain.

Consumers Also Pay the Price

The consequences are ultimately felt by ordinary Nigerians.

A manufacturer may increase the price of food because energy costs rise.

A furniture producer may increase prices.

A plastic manufacturer may charge more.

A beverage company may adjust prices.

The cumulative effect can increase household expenses.

For families already dealing with high living costs, every increase matters.

This is why the power crisis has a direct connection to everyday life.

It is not simply a problem for factory owners or government officials.

It affects the price and availability of goods purchased by millions of Nigerians.

The Employment Multiplier

A healthy manufacturing sector can create jobs far beyond factory gates.

Factories purchase raw materials.

They employ transport companies.

They contract security firms.

They use maintenance companies.

They buy packaging materials.

They rely on banks and insurance companies.

Workers spend their wages in local communities.

This creates a multiplier effect.

When factories expand, many other businesses benefit.

When factories close, those businesses can also lose revenue.

Reliable electricity can therefore support economic activity across entire communities.

What Government Must Prioritise

The current figures strengthen the argument for a comprehensive power-sector strategy.

Government must improve generation.

Transmission capacity must expand.

Distribution infrastructure must be upgraded.

Gas supply must become more reliable.

Renewable-energy investment must increase.

Industrial consumers need predictable tariffs.

Regulatory agencies need to ensure that service expectations are met.

Financing mechanisms must support energy infrastructure.

And the private sector needs clearer rules for investing in electricity.

No single intervention will solve the problem.

The Long-Term Question

The central question is whether Nigeria can continue with a system where manufacturers spend more than ₦1 trillion every year generating their own electricity.

For individual companies, self-generation may be a rational business decision.

For the national economy, however, the trend raises deeper concerns.

If businesses are forced to build their own power infrastructure, the country effectively maintains multiple parallel electricity systems.

That increases the overall cost of doing business.

A more efficient system would allow factories to receive dependable electricity from the grid while maintaining smaller backup systems for emergencies.

The objective should not necessarily be to eliminate every private generator.

Backup power will always have a role.

The goal should be to make backup generation an emergency measure rather than the primary source of industrial electricity.

The Road Ahead for Nigerian Manufacturers

Manufacturers are likely to continue investing in alternative power until grid reliability improves significantly.

Companies cannot simply shut down production while waiting for reforms.

They must keep their businesses alive.

That means continuing to explore gas, solar, batteries and other technologies.

The private sector may therefore remain a major investor in Nigeria's electricity infrastructure.

Government policy can influence the direction of that investment.

If policies favour cleaner technologies, more businesses may move towards renewable and hybrid systems.

If financing becomes cheaper, companies may be able to make larger investments.

If gas infrastructure improves, industrial gas generation could expand.

A Warning and an Opportunity

The ₦1.34 trillion figure represents both a warning and an opportunity.

It is a warning because it demonstrates the enormous cost of unreliable electricity.

But it is also an opportunity because it shows the size of the market for better energy solutions.

Nigeria has millions of businesses and thousands of factories that need dependable power.

Companies capable of providing affordable, reliable and efficient energy solutions therefore have a large potential market.

Government can encourage this market through clear policies, financing and infrastructure investment.

Conclusion

Nigerian manufacturers spent ₦1.34 trillion on alternative electricity in 2025, according to industry data, as persistent power shortages forced factories to rely increasingly on generators and other independent energy sources.

The figure was approximately 21 per cent higher than the ₦1.11 trillion recorded in 2024.

The increase continues a dramatic long-term trend.

Manufacturers spent about ₦25 billion on alternative power in 2014.

That figure eventually climbed to ₦144.5 billion in 2022, ₦781.7 billion in 2023, ₦1.11 trillion in 2024 and ₦1.34 trillion in 2025.

At the same time, manufacturers reported that average daily grid electricity supply fell from 16.7 hours in the first half of 2025 to 13.1 hours in the second half.

The consequences are substantial.

Factories have increasingly invested in gas systems, generators and other independent electricity infrastructure.

Some major industrial companies have obtained licences to generate hundreds of megawatts of electricity.

Dangote Industries reportedly generated around 1,500MW in 2025, while its refinery alone operates a 435MW power plant.

Other industrial companies have also developed significant generation capacity.

These investments demonstrate the extent to which Nigerian manufacturers have had to take responsibility for their own electricity supply.

But the situation also creates a major economic challenge.

Money spent keeping factories powered is money that cannot easily be redirected toward expanding production, hiring more workers, improving technology or reducing product prices.

High electricity costs can therefore weaken industrial competitiveness and contribute to inflation.

They can also increase the risk of factory closures and job losses.

Economic analysts have consequently urged government to address the electricity problem alongside other barriers to industrial growth, including expensive financing, poor logistics and inadequate infrastructure.

For Nigeria to build a stronger manufacturing economy, factories need electricity that is not only available but also reliable and affordable.

The long-term objective should be for private generators and alternative systems to serve primarily as backup rather than as the main source of industrial electricity.

Until that happens, manufacturers are likely to continue spending enormous amounts to keep their machines running.

The ₦1.34 trillion spent in 2025 is therefore more than a statistic.

It is a measure of the economic price Nigeria's manufacturers are paying for an unreliable electricity system.

And unless the underlying power-sector problems are resolved, the cost could continue rising — eventually affecting factory investment, employment, product prices and Nigeria's ambition to become a competitive manufacturing economy.

Iroyin Yoruba Television will continue to monitor Nigeria's electricity crisis, manufacturing sector and the economic impact of rising energy costs.