NEWS
The Cost of Unreliable Power on Nigerian Businesses
The Cost of Unreliable Power on Nigerian Businesses
Dangote Cement spent ₦384.49bn on fuel and power in H1 2026, while BUA Cement’s energy consumption costs reached ₦135.35bn.
Petrol currently sells for ₦1,350–₦1,450 per litre, while diesel costs ₦1,799–₦1,950, adding to the cost of running generators.
Small businesses face fuel bills, generator purchases, repairs and lost sales, leaving less cash for stock, wages and expansion.
October 28, () – Nigeria’s unreliable electricity supply imposes costs that extend beyond monthly power bills. Companies spend billions of naira on energy, while smaller businesses must buy fuel, operate generators and absorb losses when outages interrupt their work.
Financial statements from listed companies and surveys of small businesses show how the cost of unreliable electricity spreads across industrial production, daily operations and the wider economy.
A representation of cement manufacturers Photo credit iStock
Industrial energy bills run into billions
Cement manufacturers illustrate the scale of energy expenditure in electricity-intensive production.
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Dangote Cement reported ₦384.49bn in group fuel and power costs in H1 2026, compared with ₦387.19bn a year earlier.
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Revenue increased to ₦2.51tn from ₦2.07tn, while production cost of sales reached ₦924.31bn. Fuel and power accounted for about 41.6 percent of production cost of sales.
BUA Cement’s energy consumption expenditure rose by 6.2 percent to ₦135.35bn from ₦127.39bn. Revenue grew to ₦728.93bn from ₦580.30bn, reducing energy expenditure as a share of revenue from 22 percent to 18.6 percent.
These figures do not isolate the costs caused by grid failure. They nevertheless show the scale of energy expenditure required to sustain industrial operations.
A representation of electricity costs Photo credit Shutterstock
Electricity expenses rise across other sectors
Energy costs also feature prominently outside cement manufacturing.
Beta Glass reported ₦8.01bn in fuel, gas and electricity costs in Q1 2026, down from ₦8.45bn in Q1 2025. Revenue fell to ₦37.54bn from ₦41.16bn, while profit after tax declined to ₦7.85bn from ₦10bn. The lower energy bill does not, by itself, prove improved efficiency.
At diversified group UAC of Nigeria, consolidated electricity and power expenses jumped to ₦9.17bn in H1 2026 from ₦3.39bn a year earlier, an increase of approximately 170 percent.
The figures show differing cost patterns across businesses. They cannot be treated as direct measurements of grid-related losses, since production levels, business structures and other operating factors also affect expenditure.
Retail fuel station
Rising fuel prices squeeze small businesses
For small businesses, the pressure is often felt through daily fuel purchases rather than large corporate energy budgets.
A study of 114 small and medium-sized enterprises in Ado-Ekiti found monthly generator-fuel costs of ₦30,000–₦90,000, compared with ₦5,000–₦10,000 for grid electricity. It also found that outages negatively affected turnover.
A separate Renewable Energy Association of Nigeria survey covering 1,026 women-led micro, small and medium-sized businesses found that nearly half spent ₦2,000–₦5,000 daily on generator fuel.
Current pump prices make those budgets harder to sustain. Petrol sells for around ₦1,350–₦1,450 per litre, while diesel ranges from ₦1,799 to ₦1,950.
At those prices, ₦2,000 buys only about 1.38–1.48 litres of petrol or 1.03–1.11 litres of diesel. Spending ₦2,000–₦5,000 daily on petrol would translate to ₦60,000–₦150,000 over 30 days.
Historical National Bureau of Statistics data show petrol averaging ₦769.62 per litre in May 2024, ₦1,027.76 in May 2025, and ₦1,596.25 in May 2026.
Diesel averaged ₦1,403.96 in May 2024 and ₦1,758.26 in May 2025.
The NBS May 2026 diesel average reached ₦3,277.47, demonstrating the volatility of the market. These are historical national averages, not current pump prices.
Generators require a major upfront investment
Fuel is not the only expense. Businesses must first acquire equipment capable of meeting their electricity needs.
A retail listing puts a 2.5kVA petrol generator at about ₦311,600 in Lagos, although prices vary by model and supplier. Larger generators capable of powering more demanding equipment can cost substantially more.
That purchase can tie up money that a small business would otherwise use for stock, wages or rent. Businesses using diesel generators may also face higher fuel outlays because diesel costs more per litre and is commonly used for heavier loads.
The equipment’s capacity matters, too. A small shop running lights and a fan will not consume fuel at the same rate as a bakery, restaurant or cold room operating energy-intensive equipment.
A representation of generators Photo credit iStock
Repairs, lost sales and higher prices compound the burden
Generator costs continue after purchase. Servicing, engine oil, replacement parts and repairs add to operating expenses, while a breakdown can interrupt business until equipment is restored.
The indirect losses can be equally damaging. Food may spoil during outages, workers may remain idle, production may stop, and customers may take their business elsewhere.
Some operators cut opening hours to save fuel, sacrificing sales; others raise prices or absorb the expense through lower margins.
These decisions have wider economic implications. Higher prices can weaken consumer demand, while reduced profits leave less money for employment, inventory and expansion.
The available company filings and SME surveys do not establish a single national figure for the total cost of grid failure.
But they show how the burden spans large industrial energy bills and the daily cash-flow pressures facing smaller businesses.
For small operators, unreliable electricity means paying for backup power while continuing to meet every other cost of doing business.
Fuel, equipment, repairs, and lost operating time can therefore restrict growth and contribute to the prices customers ultimately pay.
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