Industrial goods companies listed on the Nigerian Exchange Limited (NGX) spent a combined N820.7 billion on energy in the first nine months of 2026, as rising fuel and power costs continued to put pressure on manufacturers’ operating expenses and profit margins.
Figures from their unaudited financial statements for the period ended September 30, 2026, show that the expenditure, reported as fuel and power costs, increased by 6.3% from the N771.9 billion recorded in the corresponding period of 2025.
Some of the listed companies in the sector include Dangote Cement Plc, BUA Cement Plc, Beta Glass Plc, Berger Paints Nigeria Plc, Chemical and Allied Products (CAP) Plc, HBM Nigeria Plc and Austin LAZ and Co Plc.
Analysts have identified high energy costs as a major challenge for manufacturing and other energy-intensive industries, warning that rising expenses are putting significant pressure on profit margins.
They noted that manufacturers cannot easily pass the additional costs on to consumers through higher prices without risking a loss of competitiveness and, potentially, going out of business.
Dangote Cement, the largest contributor to the group’s energy costs, reported fuel and power expenses of N580.5 billion in the first nine months of 2026, up 2.0% from N569.0 billion recorded in the corresponding period of 2025.
Meanwhile, HBM Nigeria Plc, formerly Lafarge Africa, reported production variable costs of N226.3 billion in 2026 but did not separately disclose energy expenses from other input costs.
Speaking in an exclusive interview with Nairametrics, Economist and Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the power situation had worsened since February 2026.
He attributed the increase in energy costs partly to the Middle East conflict involving the United States and Iran, which he said had driven up the prices of diesel and gas.
Yusuf said energy-intensive industries were particularly vulnerable because of their heavy dependence on these fuels for production and other operations.
He noted that Nigeria had made little progress in improving grid electricity, which remains the country’s primary source of power, adding that developments in the sector had been extremely slow.
Yusuf said building dedicated power plants was part of the business model of cement manufacturers, citing Dangote’s position that he does not build factories that depend on public electricity supply but instead ensures they have their own power generation facilities.
Also commenting, Abiodun Ogunniyi, an investment strategist and Head of Research at GTI Securities Limited, said higher energy costs increase production expenses, squeeze profit margins and reduce free cash flow, potentially limiting manufacturers’ ability to invest in capacity expansion.
He, however, noted that higher energy expenditure does not automatically translate into declining profitability, as manufacturers could partly offset rising costs through economies of scale, operational efficiency and higher selling prices.
However, weak consumer purchasing power, construction activity and competition could constrain their ability to pass on the additional costs.
Ogunniyi also noted that captive power generation could reduce revenue for electricity Distribution Companies (DisCos), as large industrial consumers account for a significant share of their most valuable customers. He said this could weaken DisCos’ revenue and make it more difficult for them to invest in distribution infrastructure.
According to a recently published report by the Manufacturers Association of Nigeria (MAN), manufacturers spent N1.34 trillion on alternative power sources, including diesel, gas and other self-generation systems, in 2025. This was 21% higher than the N1.11 trillion recorded in 2024.
The expenditure reflects the additional costs manufacturers incur to keep their operations running amid unreliable grid electricity supply. Many have reduced their reliance on DisCos by regularly using gas or low-pour fuel oil (LPFO) to power their factories and production facilities, helping them avoid losses associated with power outages and production disruptions.
A Nigerian Electricity Regulatory Commission (NERC) report showed that the country’s 11 DisCos billed customers about N2.01 trillion between January and August 2026 and collected approximately N1.63 trillion, representing a collection rate of roughly 81%.
Nairametrics reported in March 2026 that Nigeria’s fragile electricity supply chain was under pressure as financial and contractual disputes between Generation Companies (GenCos) and gas producers disrupted fuel deliveries to power plants, worsening grid instability and blackouts.
The crisis has been linked to mounting debts, foreign exchange challenges and infrastructure vulnerabilities, which continue to undermine the reliability of gas-fired power plants responsible for more than 70% of Nigeria’s electricity generation, and in some seasons over 80%.
These challenges have continued to affect electricity supply to manufacturers, forcing many businesses to rely on alternative sources of power to sustain production.
