Nigeria’s Manufacturers Struggle as N676.6bn Spent on Alternative Energy Fails to Meet Power Needs

The Manufacturers Association of Nigeria (MAN) has raised alarms over the country’s unreliable and costly electricity supply, revealing that manufacturers spent N676.6 billion on alternative energy in the first half of 2025 yet still could not meet their power needs.

According to MAN’s October 2025 Manufacturing State of Affairs report, presented by Dr. Oluwasegun Osidipe, Director of the Research and Economic Policy Division, the energy challenges continue to weigh heavily on the sector, despite a reduction in alternative energy costs during the period. The report also included the latest Manufacturers’ CEOs Confidence Index.

The report stated, “Though lower, alternative energy costs of N676.6 billion and raw material imports of N1.72 trillion in H1 2025 remain a heavy burden on operational costs and employment, with 18,935 jobs lost during the same period.”

While alternative energy spending decreased from N708.1 billion in the second half of 2024, MAN stressed that the cost remained unsustainable for manufacturers already grappling with inflation, high interest rates, and rising production expenses.

The October MCCI highlighted that inadequate power supply and the high cost of electricity and alternative energy were among the top operational challenges for manufacturers in Q3 2025.

In a telephone interview, former MAN Vice President John Aluya lamented the persistent energy shortages, noting, “We have been battling with energy in our house, in our factory and everywhere in the past two months.” He explained that alternative energy, particularly solar power, remains insufficient for industrial-scale production due to land and capital requirements, which ultimately inflate production costs.

Aluya added, “Solar demands may be 700 kilowatts; that is the maximum they are doing, about 750 watts. To get one megawatt, you need an entire acre of land… What will the investment cost? It is huge. And when you invest in such a thing, it goes directly into production costs, making Nigerian manufacturing uncompetitive.”

He emphasized that manufacturers in other countries benefit from guaranteed infrastructure, whereas Nigerian companies must provide their own power, water, and logistics support. Aluya also called on the government to regulate energy pricing, citing international examples like the UK’s energy subsidies during COVID-19, and warned that the N676.6 billion spent on alternative energy would rise further without urgent reforms.

MAN recommended that the Federal Government expand embedded generation and industrial cluster power projects using gas and renewable mini-grids to provide manufacturers with reliable, affordable off-grid electricity.

In 2024, MAN opposed a 250% tariff hike proposed by the Nigerian Electricity Regulatory Commission (NERC), warning it would cripple the sector. Its Director-General, Segun Ajayi-Kadir, had described electricity as critical yet inefficiently supplied, proposing a more manageable 100% increase instead.

Although a lawsuit filed by MAN against NERC and electricity distribution companies was dismissed by the Federal High Court in October 2024, the association continues to caution that Nigeria’s uncompetitive electricity environment threatens industrial survival and job creation.