Manufacturers spent N1.34tn on alternative energy in 2025 – MAN

Manufacturers in Nigeria incurred N1.34 trillion on alternative energy sources in 2025, a stark indicator of the escalating operational costs driven by recent economic reforms. The Manufacturers Association of Nigeria (MAN) stated that policies including the removal of fuel subsidies, exchange rate liberalization, and electricity tariff adjustments have placed a disproportionate burden on the industrial sector.

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Although these measures were designed to stabilise the macroeconomy and restore investor confidence, they simultaneously triggered unprecedented increases in production costs across the industrial sector.

Segun Ajayi-Kadir, Director-General of MAN, explained that these reforms, while intended to stabilize the macroeconomy, have led to unprecedented increases in production costs. The removal of fuel subsidies alone reportedly caused logistics and distribution costs to surge by over 300 percent shortly after implementation. Furthermore, increased electricity tariffs for Band A consumers, despite persistent grid instability, have forced manufacturers to rely heavily on diesel and gas generators.

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As a result, manufacturers continued to rely heavily on alternative energy sources such as diesel, gas and premium motor spirit to sustain operations. Expenditure on alternative energy surged from N781.68bn in 2023 to N1.11tn in 2024 and further increased to N1.34tn in 2025.

This increased reliance on costly alternative energy sources has weakened industrial competitiveness. MAN reported that expenditure on alternative energy climbed from N781.68 billion in 2023 to N1.11 trillion in 2024, and then to N1.34 trillion in 2025. Consequently, manufacturing capacity utilization dropped from 61.3 percent in the first half of 2025 to 57.7 percent in the latter half. The association also highlighted that the challenging operating environment contributed to substantial job losses, affecting over 18,900 jobs during the review period.

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This development severely weakened industrial competitiveness and contributed to declining manufacturing capacity utilisation, which dropped from 61.3 per cent in the first half of 2025 to 57.7 per cent in the second half of the same year.