Nigeria’s Minister of Power, Adebayo Adelabu, said more than 60 percent of manufacturing companies in Nigeria have been forced to exit the national grid due to unreliable power supply.
The minister further stated that the development has resulted in the self-generation of power by these companies, leading to high production costs that made Nigerian goods uncompetitive.
Adelabu disclosed during the release of a National Integrated Electricity Policy (NIEP) and the public presentation of the Integrated Resource Plan (IRP) was also made public, in collaboration with the United Kingdom Nigeria Infrastructure Advisory Facility (UKNIAF).
He said that the launching of the new policy would help to drive the transformation of Nigeria’s power industry and ensure the return of the manufacturing firms which had exited the national grid. According to him, the new policy document had been submitted for the approval of the Federal Executive Council (FEC).
The minister emphasized that bringing back the manufacturing companies that left the national grid on board is the only way the government can drive the expected economic growth and national development.
He stated: “Today, more than 60 percent of our manufacturing industry is completely off-grid. They engage in self-generation, not because they are in rural areas or they are in semi-urban areas, they are in locations where there is access to electricity.
“But how reliable is this access? We all know that there are a lot of sensitive manufacturing processes that cannot tolerate a one-minute dip in the electricity supply. Instead of taking such a risk by connecting to a grid that is not reliable, these industries would rather go for self-generation which is very expensive.
“Therefore, our products or commodities being turned out from these factories can never be competitive. The only way we can allow this to contribute to economic growth, industrialization, and national development is to ensure that there is reliability in grid supply, so that all these companies that are currently off-grid can go back to the grid, and this will reduce their cost of production, it will reduce inflation, and our locally manufactured goods can now compete with imported goods.”
Adelabu estimated that an investment of $32.8 billion is needed in the power sector between now and 2030 to enable the country to achieve universal electricity access, adding that out of the amount, $17 billion is expected from the public sector while about $15.8 billion will be contributed by the private sector.
Nigeria’s inability to supply and distribute sufficient electricity has left many businesses at the mercy of generators powered by diesel and petrol, whose prices have surged in recent months. This has added to the production costs for manufacturers significantly and rendered their products uncompetitive against imported products.
It could be recalled that the Manufacturers Association of Nigeria (MAN) raised the alarm that manufacturers in the country spend about 40 percent of their total production costs on generating energy for their businesses.
MAN put the annual economic loss caused by the inadequate power supply at N10 trillion, accounting for almost two percent of the country’s Gross Domestic Product.
President of MAN, Francis Meshioye, noted that manufacturers were hit hard last year with “a drastic rise in electricity tariffs, with rates increasing by over 250 percent”.
According to him, the surge in energy costs “became one of the highest operating expenses for businesses in the sector in 2024”.
He lamented that this has forced many manufacturers to seek alternative energy sources, further straining their financial resources and complicating their ability to remain competitive.
