Diesel Costs Push Energy Expenses To 50% Of Manufacturers’ Operating Costs

Diesel Costs Push Energy Expenses to 50% of Manufacturers’ Operating Costs Nigerian manufacturers are facing mounting energy costs, with diesel and alternative power sources now consuming about half of their production expenses, putting further pressure on profitability and competitiveness. The rising cost of energy has become a major concern for manufacturers, many of whom continue to rely heavily on diesel-powered generators and other alternative sources of electricity to keep their factories operating amid unreliable public power supply. Diesel prices have reportedly crossed ₦2,000 per litre, increasing the cost of running industrial machinery and maintaining production lines. For manufacturers, the surge in energy expenses comes on top of other operational challenges, including rising costs of raw materials, transportation, logistics and other inputs. With energy reportedly accounting for about 50 per cent of manufacturers’ operating expenditure, businesses are being forced to absorb higher production costs or pass some of the burden on to consumers through increased prices. Industry stakeholders have repeatedly warned that high energy costs could undermine the competitiveness of Nigerian-made products, particularly as local manufacturers compete with imported goods. The situation also threatens the survival and expansion of businesses already operating under difficult economic conditions, with some manufacturers potentially reducing production, cutting costs or delaying investment because of rising operating expenses. The development has renewed calls for improved electricity supply and policies capable of reducing the cost of energy for businesses. Stakeholders say addressing Nigeria’s power challenges remains critical to lowering production costs, supporting industrial growth and improving the competitiveness of the manufacturing sector.