Major companies in Nigeria collectively spent approximately N635.2 billion on power generation and utilization in 2023, marking a significant 41.5% increase compared to the previous year’s expenditure of N448.76 billion, according to a report from Vanguard.
The surge in energy costs, particularly diesel and related expenses for independent power generation, has been attributed to rising fuel prices and inconsistent public power supply across the nation.
Latest statistics from the National Bureau of Statistics (NBS) revealed that the average retail price of Automotive Gas Oil (Diesel) paid by consumers in December 2023 was N1,126.69 per litre, a 37.76 percent increase from December 2022. Similarly, the average retail price of Premium Motor Spirit (Petrol) rose by 225.85 per cent to N671.86 per litre within the same period.
The removal of fuel subsidy by President Bola Tinubu further exacerbated the situation, triggering a major energy crisis in the country.
This trend has adversely impacted various sectors, especially manufacturing, leading to increased operational challenges and reduced competitiveness. Companies such as BUA Foods Plc, Dangote Cement Plc, and others have reported sharp rises in power costs.
The spike in energy expenses has eroded profit margins, hindered competitiveness, and impeded businesses’ ability to reinvest and create new jobs. Small businesses have been particularly vulnerable, with some forced to cease operations due to the inability to absorb the additional costs or pass them on to consumers.
In response to these challenges, industry experts and stakeholders have called for urgent reforms in the power sector. Mr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), emphasized the need for decentralization of the grid and cost-reflective tariffs to attract investors to the space.
Meanwhile, an anonymous source speaking to Energy Afrique regarding the establishment of a new flip-flop factory acknowledged the challenges arising from increased diesel and raw material costs.
However, the source emphasized the criticality of adapting and effectively managing operations, especially in essential sectors like food and footwear. Despite economic challenges, demand in these sectors remains robust, underscoring the importance of resilience and strategic management.
