Yemisi Izuora
As Nigeria mulls export of electricity to other countries, the Manufacturers Association of Nigeria (MAN) has disclosed that its members spent N676.6bn on alternative energy in the first half of 2025.
Despite the huge investment in alternative sources of energy, the sector could not meet their power needs due to the country’s unreliable and unaffordable electricity supply.
The MAN in its Manufacturing State of Affairs October 2025 report, presented by the Director of the Research and Economic Policy Division, Dr Oluwasegun Osidipe, highlighted the energy woes that still plague the sector despite a drop in alternative energy costs in the first six months of the year. The October report also contained the latest Manufacturers’ CEOs Confidence Index.
This devastating report is coming as experts and electricity consumer groups openly faulted the calculations of the power Minister, Adebayo Adelabu, that Nigeria’s installed generation capacity increasing from 13GW to 14GW and achieving an all-time generation peak of 5,801.44MW, is hampered by load rejection by distribution companies currently driving down supply to about 5,000MW.
Speaking at the maiden stakeholders’ engagement organized by the Nigerian Independent System Operator (NISO) in Abuja, Adelabu, said Nigeria currently has contracts to supply 600MW to the West African Power Pool (WAPP), though only 360MW is being exported at present.
However, reacting to the Minister’s statement, the President of the Nigerian Consumer Protection Network, Kunle Kola Olubiyo, said export of power is not the solution and that it cannot be empirically proven that Nigeria’s unreliable grid system is resilient to take power above 6,000MW.
Olubiyo, said that no meaningful investment has been made to stabilize the fragile grid and that when this is done the national load demand of about 10,000-20,000MW can be absorbed locally.
According to the MAN report read, “Though lower, alternative energy costs of N676.6bn and raw material imports of N1.72tn in H1 2025 remain a heavy burden on operational costs and employment, with 18,935 job losses recorded in the same period.”
The cost of alternative energy fell from N708.1bn recorded in the second half of 2024. Still, MAN insisted that the burden remained unsustainable for manufacturers already battling rising inflation, high interest rates and increased production costs.
According to the October MCCI, inadequate power supply and the high cost of electricity and alternative energy ranked among the biggest operating constraints for manufacturers in the third quarter of 2025.
A former Vice President of MAN, John Aluya, was quoted in a report as lamenting that manufacturers continue to struggle with energy shortages. “We have been battling with energy in our house, in our factory and everywhere in the past two months.”
Aluya said, “Alternative energy at the moment is not meeting our production needs, because for you to get alternative energy, you have to invest first.”
He explained that solar power remained inadequate for industrial-scale production, stating that it required extensive land and substantial capital input that ultimately inflated production costs.
He added, “Solar demands may be 700 kilowatts; that is the maximum they are doing, about 750 watts. And to get one megawatt, you need the whole acre of land… What will the investment cost? It is huge. And when you invest in such a thing, where does it go? It goes to your production costs. And that is what makes our manufacturing not competitive in Nigeria.”
Aluya argued that manufacturers in other countries operated in environments where basic infrastructure was already guaranteed, unlike Nigeria, where companies must generate their own power, water and logistics support.
He also urged the government to intervene in energy pricing, stressing that no country allowed energy consumption to be determined solely by market forces. Citing global examples, he said, “Two years ago, when COVID came, the UK subsidised energy to the masses… So, what is wrong if the government of Nigeria subsidises energy for the poor?”
He added that the N676.6bn spent on alternative energy would “go higher” unless urgent reforms were implemented.
In its recommendations, MAN urged the Federal Government to “expand embedded generation and industrial cluster power projects using gas and renewable mini-grids, ensuring manufacturers get reliable, affordable off-grid electricity.”
In 2024 that MAN opposed a 250 per cent tariff hike proposed by the Nigerian Electricity Regulatory Commission, warning that such a steep increase would cripple the manufacturing sector.
The Director-General of MAN, Segun Ajayi-Kadir, had said electricity remained a critical but inefficiently supplied input for manufacturers. He argued that power costs had risen astronomically, saying, “No manufacturer can competitively produce in that kind of environment.”
Ajayi-Kadir said MAN had proposed a more manageable 100 per cent tariff increase, noting, “We have indicated that a 100 per cent increase would have been tolerable. And this is for power that is inefficiently generated and run.”
In April 2024, the association filed a lawsuit against NERC and electricity distribution companies, alleging an unsustainable tariff regime. However, on October 7, the Federal High Court dismissed the suit, labelling it an abuse of Court process.
The MAN continues to warn that Nigeria’s uncompetitive electricity environment remains a threat to industrial survival and job creation.
Similarly, Manufacturers in Nigeria have complained of heavily relying on alternative energy sources as unstable grid power consistently disrupts manufacturing processes.
According to the Chairman of the Pan-African Manufacturers Association (PAMA), Mansur Ahmed, multiple national grid collapses and daily power outages have crippled industries, disrupted manufacturing operations and raised production costs for companies who have been forced to turn to costly diesel generators to stay afloat.
Oriental News Nigeria reports that operators in the Manufacturing sector in the country have consistently expressed dismay over the consistent power outage in the country.
This comes as the World Bank’s Energy Progress Report 2025 ranked the country top of the list of African countries with the worst power supply.
Small businesses, in particular, have been hit hard, with many reducing operating hours or closing temporarily.
The situation remains critical, with no immediate relief in sight, threatening both economic stability and investor confidence in the two countries.
According to the Manufacturers Association of Nigeria (MAN), local manufacturers spent a whopping N1.11 trillion on alternative energy sources last year, a 42.3 per cent rise from the N781.68bn recorded the previous year.
The main issues cited for poor power supply include outdated infrastructure, vandalism, poor maintenance and an overall lack of investment in generation capacity.
Ahmed stressed that despite electricity being the lifeblood of modern economies, keeping the lights on remains a daily struggle, forcing factories to shut down mid-production, businesses to depend on diesel generators and constantly grapple with rising energy costs that erode competitiveness.
“In the face of this, our manufacturing sector, a vital driver of structural transformation and inclusive growth, continues to be constrained by chronic energy shortfalls.
“The result is stunted productivity, lost investment opportunities and a manufacturing base that struggles to reach its full potential,” he said.
He observed that the manufacturing sector has been one of the hardest-hit sectors from energy scarcity, forcing factories to either operate below capacity or rely heavily on expensive self-generation, often through diesel or petrol-powered generators, which significantly drive up production costs.
Ahmed declared that until significant reforms are made, Nigeria’s power crisis would continue to hinder economic and business growth.
“Backup generation, often the main alternative to grid electricity, remains prohibitively expensive for industries.
“According to a World Bank study, factories across the continent spend around $0.47 per kWh on self-generated power, nearly three times higher than the grid tariff in countries like Nigeria. Unsurprisingly, over 80 per cent of firms in Nigeria rely on diesel generators; this is unsustainable,” he added.
According to a World Bank Enterprise survey of select African countries in 2024, Nigeria came tops in power outage and back-up cost to firms, with an annual average downtime of 190 days out of 365 days.
In comparison, South Africa had an average of just two days of downtime, Kenya had 11 days, Senegal, six days and Zambia, eight days.
While urging government to align energy reforms with industrial policy to catalyse growth, Ahmed said key priorities should include infrastructure expansion and grid strengthening; market reforms and pricing; industrial energy policy integration; private sector engagement and financing and renewable and decentralised solutions.