Yemisi Izuora
Manufacturing firms in Nigeria are increasingly switching to natural gas as rising diesel prices continue to pressure production costs and profitability across Nigeria’s industrial sector.
The Board Chairman of the Niger Delta Chambers of Commerce, Industry, Trade, Mines and Agriculture, Idaere Gogo Ogan, confirmed that effective gas utilisation could transform industrial operations in the region.
“Effective utilisation of gas can significantly reshape industrial practices and revive business activity in the region,” he said through the Board Secretary, Chief Solomon Edebiri, during a business and investment forum organised recently by Shell Nigeria Gas in Port Harcourt, Rivers State.
He added that more than 500 companies in the Niger Delta had shut down operations in recent years due to prevailing economic and operational challenges.
The forum offered stakeholders across the energy and manufacturing sectors a rare opportunity to explore opportunities to reduce operating costs and improve productivity through gas adoption.
The price of diesel has continued to rise lately due to the ongoing tension in the Middle East.
For the telecoms sector, it is unsurprisingly operators in emerging markets that are bearing the brunt of the energy shock.
Many rely heavily on diesel generators to power base stations and telecom towers, particularly in remote areas with little or no access to national electricity grids. As a result, the challenge of connecting underserved communities is becoming even steeper.
According to environmental certification organisation Gold Standard, developing countries host an estimated 350GW to 500GW of diesel generator capacity spread across 20 million to 30 million sites, in many cases exceeding the capacity of national grids themselves.
Even before the latest conflict, diesel power was already costly, averaging around US$0.30 per kilowatt-hour and significantly more in remote regions where the unconnected often live.
Gold Standard estimates annual spending on generator fuel reaches between US$30 billion and US$50 billion.
CrossBoundary Energy estimates that around 70 per cent of Africa’s half a million telecom towers rely on diesel generators, accounting for between 30 per cent and 60 per cent of tower operating expenditure.
Fuel costs for operators across parts of Africa have surged by 40 per cent to 60 per cent over the past two years, with the Strait of Hormuz disruption adding further pressure.
Nigeria has been highlighted as one of the markets facing the most acute energy challenges, with grid availability in some regions falling as low as 40% to 50%. In rural areas of the Democratic Republic of Congo, telecom infrastructure is almost entirely dependent on diesel due to the absence of national grid access.
Across Sub-Saharan Africa, between 60 per cent and 80 per cent of telecom towers experience daily grid outages lasting between eight and 12 hours.
The demand for energy is only expected to rise further as operators continue expanding 4G coverage and rolling out 5G networks across emerging markets.
According to MTN Consulting, renewable energy accounted for just 23% of global telecom energy consumption in 2024, up from 10 per cent in 2019.
However, much of that progress has been driven by operators in Europe rather than developing regions.
Operators including Turkcell, Tele2, Telia, Deutsche Telekom, KPN, Swisscom, A1 Telekom Austria, Telefonica, Telecom Italia and Liberty Global were highlighted by MTN Consulting as benefiting from long-term “foresight” as competitors elsewhere face increasingly volatile energy costs.
Ismail Patel, senior analyst for Enterprise Technology and Services at GlobalData, said energy concerns are now becoming inseparable from telecom strategy in emerging markets.
“Energy policy is increasingly being integrated into telecoms policy,” Patel said.
“Diesel is used in markets where there are unreliable electricity grids or frequent loadshedding. Thus far, diesel has been a core part of the business model, not just as a back-up for powering towers. The whole ecosystem of diesel – which involves manually delivering fuel to towers and manpower is also part of the model.”
Patel warned that rising diesel costs caused by geopolitical instability will ultimately push up the price of connectivity or squeeze already-thin operator margins in highly price-sensitive markets.
“Operators will be forced to re-evaluate the most optimal back-up power mechanisms for their networks, including clean energy upgrades,” he said.
“This includes solar panels, which are susceptible to theft but do not have the immediate resale value of diesel, which is even more prone to unauthorised misappropriation.”
He added that satellite connectivity could emerge as a medium-term alternative for network resilience, particularly as direct-to-device (D2D) satellite services mature.
“Within this context, satellite as a back-up coverage mechanism might feature in the medium term, with both US and Chinese LEO satellite operators in a prime position to offer back-up connectivity to devices in place of towers,” Patel said.
“As the digital divide decreases and more underserved communities become dependent on connectivity, it will become far less economical for operators and governments to tolerate outages.”
Rather than being driven primarily by sustainability goals, Patel argued the shift towards renewable and satellite-powered infrastructure may ultimately become an economic necessity.
“Operators will start to look at greener options and satellite not because they are green or necessarily offer better coverage, but because they are becoming more cost-effective compared to diesel,” he said.
Patel identified Pakistan, Bangladesh, much of Sub-Saharan Africa including Nigeria and South Africa, Lebanon, and rural regions of India, Indonesia and the Philippines as among the markets most exposed to the crisis.
Shell Nigeria Gas disclosed that the event coincided with the onboarding of two new industrial customers in Agbara, Ogun State Intercontinental Distillers Limited II and Rumbu Industries Limited—into Shell Nigeria Gas’ expanding distribution network.
The company stated that the addition brings the number of firms using its gas solutions to over 150 across Abia, Bayelsa, Ogun and Rivers States.
In a keynote address delivered by SNG’s Head of Gas Distribution, Chukwuka Amos-Ejesi, on behalf of the Managing Director, Ralph Gbobo, the company said manufacturers switching to gas were already benefitting from lower and more stable energy costs.
“Companies that transition to natural gas consistently benefit from lower and more predictable energy costs, reduced exposure to liquid fuel price volatility, enhanced operational uptime, improved planning certainty, and a stronger competitive offering for their customers.
“Our focus is to provide solutions that deliver immediate economic value while supporting long-term growth,” he said.
SNG officials also stressed the company’s expansion plans in Rivers State and outlined investment opportunities in gas distribution, industrial supply and power generation.
The company said natural gas offered economic and environmental advantages over alternative energy sources such as diesel, especially at a time when manufacturers are grappling with high energy costs and unstable power supply.
Stakeholders at the forum commended the initiative, saying wider gas adoption could help revive industrial activities in the Niger Delta region.
The forum also witnessed the signing of gas sales and purchase agreements with Boskel Nigeria Limited and Bluefinn Global Resource Limited in Rivers and Bayelsa states, respectively, further expanding Shell Nigeria Gas’ footprint in the region.
Meanwhile, the company said the gas supply to Intercontinental Distillers Limited II and Rumbu Industries Limited was equivalent to about 4MW of electricity, a development expected to improve production efficiency and lower operating costs.
According to Gbobo, the milestones reflect the company’s commitment to deepening gas distribution and supporting industrial growth in Nigeria.
“These milestones underscore our commitment to expanding our gas distribution footprint, deepening customer engagement, and supporting Nigeria’s industrial growth,” he stated.
Participants at the forum included representatives of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the Bank of Industry, the Rivers State Investment Promotion Agency, the Manufacturers Association of Nigeria, the Port Harcourt Chamber of Commerce, and the Niger Delta Chambers of Commerce, Industry, Trade, Mines and Agriculture.
Founded in 1998 as a wholly owned subsidiary of Shell, Shell Nigeria Gas currently supplies gas to industrial customers in four states across the country
The blockade of the Strait of Hormuz caused by the US and Israel’s war with Iran is placing fresh pressure on emerging market telecom operators, many of which remain heavily reliant on diesel generators to keep their networks running.
According to developingtelecom, with around 20 per cent of the world’s oil supply disrupted and crude prices climbing above US$120 per barrel for the first time since 2022, operators across Africa, the Middle East and Asia are being hit by soaring energy costs at a time when demand for connectivity continues to rise.
Markets including Pakistan, the Philippines and parts of Sub-Saharan Africa are among the hardest hit due to their dependence on imported fuel and unreliable national electricity grids.
Industry analysts warn the crisis could accelerate the telecom sector’s shift towards renewable energy and alternative network back-up solutions such as satellite connectivity, as diesel becomes increasingly expensive and operationally unsustainable.
Crude oil prices rose above US$120 per barrel at the end of April, their highest level since 2022.
Emerging markets have been hit hardest, particularly countries that have failed to diversify their energy supply chains.
The Philippines is currently facing a major crisis, with 98 per cent of its oil imports sourced from the Middle East. Pakistan has also seen supplies of liquefied natural gas disrupted, making daily life increasingly difficult for households and businesses alike.