Blackouts: Factories spend N1.3tn on alternative power

Nigerian manufacturers spent N1.34tn on alternative electricity sources in 2025, as persistent power outages forced factories to rely on diesel generators and other off-grid energy solutions to sustain production.

Exclusive data from the Manufacturers Association of Nigeria obtained by The PUNCH showed that manufacturers’ spending on alternative power rose by about 21 per cent from N1.11tn in 2024 to N1.34tn in 2025.

The latest increase highlights the growing burden of unreliable electricity supply on Nigeria’s industrial sector, with manufacturers forced to shoulder the cost of generating a significant portion of the power required to keep their plants operating.

MAN data showed that spending on alternative electricity has risen sharply over the past decade, despite fluctuations in some years.

Manufacturers spent N25bn on alternative power in 2014, with the figure increasing to N59bn in 2015 and N129.95bn in 2016.

The expenditure declined to N117.4bn in 2017 and fell further to N93.11bn in 2018 and N61.38bn in 2019.

It rose to N81.91bn in 2020 before dropping to N71.22bn in 2021.

However, the cost of alternative electricity began a steep climb from 2022, reaching N144.5bn that year.

The figure then increased to N781.7bn in 2023, before crossing the N1tn mark at N1.11tn in 2024.

By 2025, manufacturers’ alternative power bill had climbed further to N1.34tn.

The situation has raised concerns about the competitiveness of Nigerian manufacturers, particularly as firms contend with weak consumer purchasing power and intense pressure on operating margins.

Industry stakeholders have stressed the need for more reliable grid electricity and greater investment in alternative energy infrastructure to reduce manufacturers’ dependence on expensive diesel-powered generation.

“Grid reliability deteriorated significantly, with daily power supply dropping from 16.7 hours in H1 2025 to just 13.1 hours in H2 2025,” MAN, led by Segun Ajayi-Kadir, said.

Manufacturers abandon DisCos

The PUNCH gathered that many manufacturers are no more relying on the electricity distribution companies, popularly known as DisCos, in their production units or factories, but have deployed gas or LPFO on regular basis in order to avoid suffering losses arising from power cuts during production activities.

Based on our findings, some of the companies that have jilted DisCos in their factories include: Flour Mills of Nigeria, Dangote Group, Cadbury, Haffar, Kam Industries,

Nigerian Breweries Plc, Flour Mills of Nigeria Plc, Lafarge Africa, Procter and Gamble Nigeria Limited, Bank of Industry Ltd, Seven-Up Bottling Company Plc, Dangote Cement Plc, Lekki Port LFTZ Enterprise Limited, Guinness Nigeria Plc, Nestle Nigeria Plc, and Aluminium Smelter Company of Nigeria.

Others in the same category are: De-United Foods Industries Limited, Sagamu Steel Nigeria Limited, British American Tobacco Nigeria Limited, Unilever Nigeria Plc, Total E & P Nigeria Limited, and Mikano International Limited, according to the Nigerian Electricity Regulatory Commission.

In 2025, Pure Flour Mills Limited, a manufacturer in Rivers State, got a licence to generate 546MW, according to the NERC.

Dangote Industries Limited had generated about 1,500 megawatts of electricity in 2025, according to Aliko Dangote. The Dangote refinery alone had a 435MW power plant that could meet the total power requirement of the Ibadan Electricity Distribution Company in 2025.

According to NERC, Pure Flour Mills Limited in Rivers State got a permit to generate 546MW of electricity.  United Cement Company of Nigeria Limited generates 105MW; Flour Mills of Nigeria Plc, 70MW; and Lafarge Cement Wapco Nigeria Plc, 90MW.

An earlier survey undertaken by professor of economics at University of Ibadan, Adeola Adenikinju, showed that manufacturers self-generate 13,223 megawatts (MW) of electricity. But with the exodus from DisCos, analysts say the figures have expanded in the last two years.

Factory shutdowns

Several Nigerian factories have closed down due to poor power supply. Louis Carter, a plastic-making company , is one of them.

“We had a major challenge with energy costs, which was quite unfortunate. We were also not getting the raw materials we needed,” said General Manager of Louis Carter Industries, Ndubuisi Okoli.

Mothers Pride Ventures is another one. It produced thousands of pet bottles, nylon and plastic cans in Asaba for over five years. However, it shut down in 2018 over high production costs.

Managing Director of the now moribund company, Jimoh Dayo, told our reporter that the company went out of business due to the alleged inefficiency of Benin Electricity Distribution Company (Benin DisCo).

“The way DisCos are handling power is not the way it should be. They provide electricity to whoever they want. The privatisation of the power sector (in 2013) should not have been done. Lack of power supply from them destroyed our business.”

Analysts intervene

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said: “Power supply continues to be one of the most binding constraints on industrial productivity. Manufacturers are compelled to self-generate energy at enormous cost, undermining competitiveness and eroding profitability.”

He added, “No manufacturing economy can achieve global competitiveness when power is unreliable,logistics are inefficient and capital is prohibitively expensive.”

He said Nigeria’s industrial future requires a deliberate and sustained commitment to competitiveness.

“Power sector reforms must deliver reliable and affordable electricity. Investments in rail infrastructure must be accelerated to reduce logistics costs. Development finance institutions should be strengthened to provide long-term industrial financing at concessionary rates.”

Manufacturers have severally filed lawsuits against DisCos and the Nigerian Electricity Regulatory Commission over what they described as arbitrary increases in the electricity bills.

The recently introduced Band A is revving up their costs and they say it could shut more factories.

“Moving forward, stabilising macroeconomic conditions, improving energy supply, and ensuring access to affordable financing will be critical for sustaining growth and enhancing industrial productivity,” Ajayi-Kadir said.