Nigerian industrial companies listed on the Nigerian Exchange Limited (NGX) spent a combined ₦820.7 billion on fuel and electricity in the first nine months of 2026, highlighting the growing burden of energy costs on manufacturers amid persistent power supply challenges and rising production expenses.
The expenditure, disclosed in the companies’ unaudited financial statements for the nine months ended September 30, 2026, represents a 6.3 per cent increase from the ₦771.9 billion recorded during the corresponding period of 2025.
The rising energy bill has intensified concerns about the operating environment for Nigerian manufacturers, particularly businesses that depend heavily on electricity, diesel and gas to sustain production.
Industry analysts have warned that escalating energy expenses are putting pressure on profit margins, reducing available cash flow and potentially limiting manufacturers’ capacity to expand operations.
The situation also presents a difficult pricing challenge for businesses, as transferring additional production costs to consumers through higher prices could weaken demand, reduce competitiveness and place further pressure on already constrained household purchasing power.
Dangote Cement Plc accounted for the largest share of energy expenditure among the companies covered, reporting fuel and power costs of ₦580.5 billion in the first nine months of 2026.
The figure represents a 2 per cent increase from the ₦569 billion recorded in the corresponding period of 2025.
BUA Cement Plc also recorded a substantial increase in energy expenses, with its fuel and power costs rising by 21.5 per cent to ₦216.6 billion from ₦178.2 billion in the previous year.
Combined, the two cement manufacturers spent ₦797.1 billion on energy during the period, representing a 6.7 per cent increase from the ₦747.2 billion recorded in the first nine months of 2025.
Their combined expenditure accounted for the overwhelming majority of the ₦820.7 billion reported by the industrial companies covered in the analysis.
Other listed companies also recorded varying movements in energy expenses.
Beta Glass Plc reported a 5.3 per cent decline in energy costs to ₦23.2 billion, compared with ₦24.5 billion in the corresponding period of 2025.
Chemical and Allied Products (CAP) Plc recorded a more significant reduction, with energy expenses falling by 20.4 per cent to ₦30.3 billion from ₦38 billion.
Austin LAZ and Co Plc, which reported energy costs of just ₦50,000 in 2025, recorded expenditure of approximately ₦10.9 million in 2026. The reported increase was 22,046.9 per cent, although the absolute amount remained relatively small.
Meanwhile, HBM Nigeria Plc, formerly Lafarge Africa, reported production variable costs of ₦226.3 billion but did not separately disclose its energy expenses from other production inputs.
Economist and Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, attributed the pressure on energy costs partly to developments in the international energy market.
Speaking in an interview with Nairametrics, Yusuf said Nigeria’s power situation had worsened since February 2026, adding that the conflict involving the United States and Iran had contributed to increases in diesel and gas prices.
He explained that energy-intensive industries were particularly exposed because of their heavy dependence on these fuels for production and other operational activities.
According to him, energy costs remain a major challenge for industrial businesses and several other sectors of the economy.
Yusuf also expressed concern about the slow pace of improvements in Nigeria’s national electricity grid, which remains an important source of power for businesses and households.
He noted that some major manufacturers have adopted independent electricity generation as part of their operational strategy rather than depending entirely on public electricity supply.
Using Dangote Cement as an example, he explained that the company’s business model includes dedicated power generation facilities to support its factories.
Investment strategist and Head of Research at GTI Securities Limited, Abiodun Ogunniyi, said higher energy expenditure increases production costs, squeezes profit margins and reduces free cash flow.
He warned that the additional financial burden could affect manufacturers’ ability to invest in new production capacity and expand their operations.
However, Ogunniyi explained that rising energy expenditure does not automatically mean that a company’s profitability must decline.
He noted that manufacturers could partly absorb higher costs through economies of scale, improved operational efficiency and adjustments to selling prices.
Nevertheless, the ability to increase product prices may be limited by weak consumer purchasing power, competition and the level of activity in the construction sector.
These factors could make it difficult for manufacturers to transfer the full burden of rising energy costs to consumers without affecting demand.
Ogunniyi further observed that the growing reliance of major industrial consumers on captive power generation could have implications for electricity distribution companies.
According to him, large industrial customers account for a significant share of the valuable customers served by Distribution Companies (DisCos).
As more manufacturers generate electricity independently, DisCos could experience revenue pressures, potentially weakening their capacity to invest in distribution infrastructure.
The growing energy burden is also reflected in the wider manufacturing sector.
A report published by the Manufacturers Association of Nigeria (MAN) showed that manufacturers spent ₦1.34 trillion on alternative power sources, including diesel, gas and other self-generation systems, in 2025.
The expenditure represented a 21 per cent increase from the ₦1.11 trillion recorded in 2024.
The rising investment in alternative electricity sources reflects manufacturers’ efforts to keep production facilities running despite unreliable grid electricity and frequent power disruptions.
Many businesses have increasingly turned to independent power generation, including gas and low-pour fuel oil (LPFO), to reduce production interruptions and avoid losses associated with electricity outages.
Some of Nigeria’s largest industrial companies have established substantial captive power generation capacity.
Dangote Cement generates at least 345 megawatts of captive electricity across its four Nigerian plants.
BUA Cement has an estimated power generation capacity of between 240 megawatts and 280 megawatts, mostly from gas-fired facilities.
HBM Nigeria also has at least 200 megawatts of captive generation capacity.
These investments demonstrate the importance of reliable electricity to industrial production and the additional financial commitments manufacturers must make when public power supply cannot consistently meet their operational requirements.
Despite the challenges facing the electricity sector, data from the Nigerian Electricity Regulatory Commission (NERC) showed that the country’s 11 electricity distribution companies billed customers approximately ₦2.01 trillion between January and August 2026.
They collected about ₦1.63 trillion during the period, representing a collection rate of approximately 81 per cent.
The figures provide an indication of the financial activity within the distribution segment of the electricity market, even as industrial consumers continue to invest in alternative power sources.
The wider electricity supply chain has also faced challenges linked to financial and contractual disputes between electricity generation companies and gas producers.
Earlier reporting by Nairametrics in March 2026 linked disruptions in gas deliveries to mounting debts, foreign exchange difficulties and infrastructure vulnerabilities affecting gas-fired power plants.
The challenges have contributed to instability in electricity generation and supply, with consequences for manufacturers that depend on consistent power to maintain production schedules.
The latest energy expenditure figures highlight the growing importance of affordable and reliable electricity to Nigeria’s industrial competitiveness.
For manufacturers, higher fuel and power costs translate into increased production expenses, tighter margins and additional pressure on investment decisions.
Although larger companies may have the financial capacity to establish captive power facilities, smaller manufacturers could find it more difficult to absorb the cost of independent electricity generation.
The situation also raises broader questions about the sustainability of industrial production in an environment where businesses must commit substantial resources to securing the electricity required for their daily operations.
As manufacturers continue to navigate rising energy expenses, improvements in grid reliability, gas supply, electricity infrastructure and the broader energy market will remain important to reducing production costs and supporting industrial growth.
