Two-fold energy cost jump strains corporates

Nigeria’s largest listed companies are facing an energy crisis that is changing the business landscape in the continent’s most populated market, a BusinessDay analysis has found.

Data from the Nigerian Exchange Group shows that 10 of the top 30 firms saw their combined energy costs more than double, rising 108 percent to N7.98 billion in 2025 from N3.44 billion the year before, as chronic power grid issues and increasing diesel prices force companies to absorb costs they once only hinted at in annual reports.

The impacted companies represent various sectors of the Nigerian economy: consumer goods leaders Dangote Sugar and BUA Foods; the cement giants Dangote Cement and BUA Cement; banking group First Holdings; palm oil producer Okomu Oil; major hotel chain Transcorp Hotels; construction materials group Lafarge Africa; and Geregu Power, the electricity generation company, which paradoxically faced higher energy costs as fuel prices increased.

Zenith Bank also appeared among the ten firms analysed by BusinessDay.

For example, Dangote Sugar’s energy bill grew 68 percent to N340.2 million in 2025 from N203.0 million in 2024.

For a sugar producer relying heavily on industrial equipment, every naira spent on diesel or private power generators directly affects profit margins, costs that are ultimately passed on to consumers.

Transcorp Hotels’ energy bill exceeded N5 billion in 2025, climbing from N4.763 billion to N5.008 billion the previous year.

This Abuja-based hospitality group is one of the largest in West Africa and requires reliable power for air conditioning, lighting, elevators, kitchens, and data systems.

In Nigeria, where hotels act as self-sufficient power providers and maintain extensive generator and fuel contracts, even a small cost increase can lead to hundreds of millions of naira in added expenses.

Business analysts warn that these rising energy costs impact more than just hotels. Higher expenses increase the prices of conference rooms, individual rooms, and business meetings in Nigeria, creating challenges for an investment climate that is already under strain.

“The cost of power is now the biggest threat to manufacturing in Nigeria,” Aisha Mohammed, an energy analyst at the Lagos-based Centre for Development Studies, shared with BusinessDay in an interview.

She noted that many factories run only a few hours each day because they cannot afford enough diesel to operate their machines.

At Dangote Cement, the country’s largest cement producer and a closely watched blue chip on the exchange, the energy bill remained relatively stable year-on-year, at N681.9 million in 2025 compared to N679.9 million in 2024.

Okomu Oil saw its energy costs increase to N1.245 billion from N988.6 million, a 26 percent rise reflecting the fuel-intensive nature of agro-processing in Nigeria’s southern region.

Lafarge Africa, the building materials division of global firm Holcim, reported energy costs rising to N137.5 million from N83.9 million, a 64 percent increase that highlights the challenges faced by the broader manufacturing sector with energy procurement.

Even Geregu Power, an electricity company, reported its own energy expenses climbing to N15.1 million from N10.2 million, underscoring the odd economics of Nigeria’s power sector, where electricity providers incur higher costs to generate power.

In the banking sector, First Holdings, the parent company of First Bank of Nigeria, one of the largest and oldest banks in the country, reported its energy costs at N45.5 million in 2025, up from N34.6 million a year earlier, a 31 percent increase.

For a financial institution with hundreds of branches and numerous data centres, maintaining operations during power outages is essential for regulatory compliance and reputational standing.

However, these costs eventually get factored into loan rates and banking fees, raising the overall cost of credit in an economy where small businesses already struggle with interest rates above 20 percent.

Amit Bose, chief financial officer at Valency Agro Nigeria Limited, a farming company, mentioned that many manufacturers face high energy costs due to the country’s unreliable power supply.

“Power supply from the grid is not consistent. Many manufacturers either run on diesel or gas generators,” he explained at a BusinessDay conference.

Beyond the listed companies, BusinessDay found that some firms are speeding up investments in rooftop solar panels, mini-grids, and battery storage to reduce reliance on diesel.

Others are looking into power purchase agreements with independent power producers. However, these solutions require initial capital, which is costly to obtain in a market with high benchmark interest rates.