Manufacturers Spent N1.83trn On Diesel Amid Rising Energy Costs

… April Diesel Cost Hits N980.9bn From N849.6bn In March

…Diesel Consumption Spike As Unreliable Power Supply Persists

Manufacturers in Nigeria spent an estimated N1.83tn on diesel within two months, according to data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), underscoring the growing cost burden of energy on industrial production amid persistent electricity shortages.

The data showed that expenditure on Automotive Gas Oil (AGO), co mmonly known as diesel, rose from about N849.6bn in March to approximately N980.9bn in April, reflecting increased consumption volumes and continued dependence on self-generated electricity across industries.

Daily diesel consumption also climbed from an estimated 14.5 million litres in March to 17.3 million litres in April, as manufacturers intensified reliance on generator sets to power production lines and maintain operations.

In most industrial facilities, diesel is used to run heavy-duty generators that supply electricity for production machinery, assembly lines, processing plants, packaging systems, cold storage units, and other critical manufacturing operations.

It also powers auxiliary systems such as water pumping, heating, ventilation, and factory lighting, making it central to virtually all stages of production in the absence of stable grid electricity.

Manufacturers say diesel has effectively become the backbone of industrial energy supply in Nigeria, despite its high and volatile cost.

Many firms report that without it, factories would be forced to shut down or operate at severely reduced capacity due to unreliable public power supply.

The rising expenditure is already squeezing profit margins, with operators warning that production costs are increasing while competitiveness declines.

Several firms have reportedly adjusted prices upward to reflect the rising energy burden, contributing to inflationary pressures in the wider economy.

Industry stakeholders continue to argue that weak and inconsistent electricity supply remains one of the most significant constraints on manufacturing growth in Nigeria, calling for urgent reforms in the power sector.

They maintain that without stable grid electricity, businesses will continue to rely heavily on diesel to sustain production, diverting funds that could otherwise be invested in expansion, technology upgrades, and job creation.

Analysts also note that the trend reflects structural inefficiencies in the energy ecosystem, where manufacturers are forced to self-generate power at significantly higher costs than grid supply would require.

The situation has renewed calls for accelerated investment in transmission infrastructure, improved distribution efficiency, and policy stability to attract private sector participation in electricity generation.

Manufacturers in Nigeria had repeatedly raised the alarm over high diesel costs and constant power outages, warning that many factories risk closure.

Executive Director of Universal Luggage Industries in Lagos, Frank Onyebu had said the company relies heavily on diesel generators amids poor power supply adding that it now spends more in buying diesel.

“Just today alone, we’ve had two major power outages. Our machinery has been affected, and our production costs have gone through the roof,” Onyebu said.

He added that warehouses are now filled with unsold stock, as the firm has been forced to sell below cost.

Onyebu called on the government for assistance.

“It’s impossible to continue running a business like this. We are still calling on the government… If not, a lot of manufacturers will go out of business.”

The Manufacturers Association of Nigeria (MAN) had also stated that power-related expenses normally account for about 40 per cent of operating costs. That burden, it added, has worsened sharply following recent diesel price hikes.

MAN Director-General Segun Ajayi-Kadir had said, “When that percentage of your cost escalates by about 200 per cent to 400 per cent you have a major problem in your hands,” he said.

He said the situation is compounding weak consumer demand and thin profit margins, leaving many firms with little choice but to absorb losses or shut down.

ENDS