Nigeria’s power crisis has reached a critical point, with over 60% of manufacturing companies in the country forced to disconnect from the national grid.
These businesses have turned to self-generation to meet their energy needs, driving up production costs and making Nigerian goods increasingly uncompetitive on the global market.
This alarming revelation was made by the Minister of Power, Adebayo Adelabu, during the unveiling of the National Integrated Electricity Policy (NIEP) and the Integrated Resource Plan (IRP), in collaboration with the United Kingdom Nigeria Infrastructure Advisory Facility (UKNIAF).
Adelabu warned that the lack of a reliable power supply is stifling industrial growth and national development. Many manufacturers, despite having access to the national grid, have opted for costly self-generation due to the unreliability of electricity.
Adelabu stated, “More than 60% of our manufacturing sector is off-grid, not because of geography, but because the power supply simply cannot be trusted. Sensitive processes cannot risk even a minute of power outage, so businesses are turning to expensive self-generation.”
The minister emphasized that restoring reliable grid power to these manufacturers is vital for driving economic growth, industrialization, and national development. “By ensuring reliable grid power, we can reduce production costs, lower inflation, and make Nigerian products competitive globally,” he added.
The NIEP aims to address these challenges head-on by transforming Nigeria’s power sector and bringing the manufacturers back to the grid. Adelabu shared that the policy has already been submitted to the Federal Executive Council (FEC) for approval.
Adelabu also highlighted the staggering investment needed to fix Nigeria’s energy woes: $32.8 billion by 2030. He noted that $17 billion of this will come from the public sector, while the private sector is expected to contribute $15.8 billion. This investment is crucial for achieving universal electricity access and alleviating the burden on businesses reliant on costly generators.
The Manufacturers Association of Nigeria (MAN) has long sounded the alarm about the energy crisis, revealing that manufacturers are spending up to 40% of their production costs on energy. Francis Meshioye, MAN’s President, stressed the massive economic loss caused by inadequate power, estimating it at N10 trillion annually, nearly 2% of Nigeria’s GDP.
This energy crisis has been further exacerbated by surging electricity tariffs, with rates increasing by more than 250% in 2024, making energy costs one of the largest operating expenses for businesses. With diesel and petrol prices skyrocketing, many manufacturers are left with no choice but to invest in alternative energy sources, putting a strain on their finances and further diminishing their ability to remain competitive.
Adelabu concluded by calling for urgent action to resolve Nigeria’s power sector challenges, stressing that reliable electricity is the backbone of industrial progress. Without it, the nation risks falling behind in its quest for economic growth and development.
