The Manufacturers Association of Nigeria has warned that the country’s unreliable and expensive electricity supply continues to frustrate industrial growth, as manufacturers spent N676.6bn on alternative energy in the first half of 2025 but still failed to meet their power needs. This warning came from the MAN Manufacturing State of Affairs October 2025 report, presented by the Director of Research and Economic Policy Division, Dr. Oluwasegun Osidipe.
The report revealed that although alternative energy costs dropped slightly compared to the N708.1bn recorded in the second half of 2024, they still remain extremely high for manufacturers who are already battling rising inflation, high interest rates and increasing production expenses. The October assessment also included the latest Manufacturers’ CEOs Confidence Index, which showed that inadequate power supply and the high cost of electricity ranked among the biggest challenges facing manufacturers in the third quarter of 2025.
According to the report, manufacturers also spent N1.72tn on raw material imports in the same period, while the sector recorded 18,935 job losses due to the harsh operating environment. MAN warned that these costs have continued to push many companies towards closure or reduced production levels, especially small and medium-scale industries that cannot afford long-term investments in alternative power.
A former Vice President of MAN, John Aluya, said in a telephone interview, the energy crisis has become overwhelming for manufacturers. He explained that companies have been struggling with power shortages in their factories, offices and even homes. According to him, the rising cost of diesel, gas and solar installations has left many manufacturers with no reliable solution.
Aluya said alternative energy sources, especially solar, are still not enough to support industrial-level production. He noted that solar installations require large land areas and heavy capital investment, which eventually increase production costs. He explained that the cost of setting up a solar power system capable of delivering one megawatt is huge and requires extensive land, adding that such investments make Nigerian products less competitive in both local and international markets.
He also compared Nigeria’s situation with other countries where basic infrastructure like electricity, water and transport is already provided by government. He stated that Nigerian manufacturers are forced to generate their own power and handle logistics, which makes running a business more expensive and difficult. Aluya called on the Federal Government to intervene in energy pricing and follow the example of countries like the United Kingdom, which subsidised energy costs during the COVID-19 pandemic to support citizens and businesses.
He warned that the N676.6bn spent on alternative energy would continue to rise if urgent reforms were not carried out. Manufacturers fear that without stable and affordable power, industrial output will continue to decline, threatening jobs and reducing Nigeria’s competitiveness under the African Continental Free Trade Area.
In its recommendations, MAN advised the Federal Government to expand embedded generation and industrial power cluster projects using gas and renewable mini-grids. The association said these off-grid solutions would help manufacturers access more reliable and affordable electricity, especially in industrial zones where power is constantly needed.
The body also reminded the public that it had strongly opposed the 250 per cent electricity tariff hike proposed by the Nigerian Electricity Regulatory Commission in 2024, warning that such an increase would cripple the manufacturing sector. The association insisted that electricity is a critical input in production, but it remains inefficiently supplied in Nigeria.
MAN Director-General, Segun Ajayi-Kadir, said no manufacturer can operate competitively in an environment where power costs keep increasing without improvement in supply. He explained that MAN had proposed a 100 per cent tariff increase instead of the 250 per cent hike, arguing that even this suggested increase would still be for power that is not reliably generated and distributed.
In April 2024, MAN filed a lawsuit against NERC and electricity distribution companies, accusing them of implementing an unsustainable and unfair tariff regime. However, the Federal High Court dismissed the suit on October 7, describing it as an abuse of court process. Despite the setback, the association continues to warn that Nigeria’s uncompetitive electricity environment is a major threat to industrial survival, job creation and the country’s long-term economic growth.
Analysts say urgent reforms are needed to reduce production costs, improve electricity supply and support the manufacturing sector, which remains essential for economic diversification and national development.
