Nigerian Manufacturers Lament Rising Energy Costs Amid Tension in Middle East
- Nigeria’s manufacturing sector is under pressure due to rising energy costs
- Diesel prices have surged by about 65 per cent, increasing factory operating costs
- Shipping disruptions have raised freight charges and local haulage expenses
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology, and macroeconomic trends in Nigeria.
Nigeria’s manufacturing sector is facing renewed strain due to rising diesel prices and increased global shipping costs linked to tensions in the Middle East, involving Iran and disruptions in the Strait of Hormuz.
In a statement shared with Legit. According to the Manufacturers Association of Nigeria (MAN), manufacturers say the crisis in the Middle East has worsened existing challenges, as they already struggle with high production costs and an unstable power supply.
According to the Director-General of MAN, Segun Ajayi-Kadir, the impact of the conflict is immediate and far-reaching.
Source: Getty Images
Rising energy and logistics costs hit production
Ajayi-Kadir explained that many manufacturers depend heavily on gas and diesel, also known as Automotive Gas Oil, to power operations due to unreliable electricity supply.
He said the global energy shock triggered by the conflict has driven up local fuel prices, significantly increasing production costs.
Data cited by MAN shows that depot prices of diesel have risen sharply by about 65 per cent, climbing from N970 to N1,600. This surge has added pressure on factories reliant on diesel-powered generators.
Beyond energy costs, the disruption of the Strait of Hormuz, a critical global trade route, has led to longer shipping times and higher freight charges, making the importation of raw materials more expensive.
Shipping costs surge as global firms adjust rates
Global shipping firms have begun adjusting prices in response to the situation. CMA CGM recently introduced a $600 per twenty-foot equivalent unit (TEU) peak season surcharge on cargo from China to Nigeria.
The increase reflects a broader trend of rising logistics costs, with haulage expenses also climbing locally.
Transporting a container from Apapa port to warehouses in Ikeja, which previously cost about N450,000, now ranges between N650,000 and N700,000, further squeezing manufacturers’ margins.
Key sectors face the biggest impact
MAN noted that industries such as chemicals and pharmaceuticals, basic metals, iron and steel, as well as food and beverages, are among the hardest hit.
Ajayi-Kadir explained that petrochemical-based inputs are particularly vulnerable to global oil price fluctuations, with disruptions in the petroleum market driving up the cost of active pharmaceutical ingredients (APIs) and other raw materials.
He warned that prolonged instability could lead to higher consumer prices and reduced competitiveness for Nigerian manufacturers, especially in export markets.
Risk to growth outlook and inventories
The MAN official cautioned that if the conflict persists, manufacturers could face shrinking margins alongside rising unsold inventories.
He said this trend threatens the sector’s growth target of 3.1 per cent in 2026.
Recent data also indicates subdued performance, with manufacturing GDP growth recorded at 1.13 per cent year-on-year in the fourth quarter of 2025, slightly lower than previous periods.
Source: Getty Images
MAN call for policy response, local capacity
The MAN director-general urged the federal government to adopt proactive measures to strengthen the manufacturing sector against external shocks.
He stressed the need to reduce reliance on imported raw materials and build local capacity.
Ajayi-Kadir added that past global crises offer lessons, noting that Nigeria must avoid repeating earlier policy failures and instead use the current situation to drive long-term industrial development.
Petrol marketers urge FG to introduce relief measures for Nigerians
Legit.ng earlier reported that petrol marketers have asked the government to introduce temporary measures to ease the hardship caused by rising petrol prices.
The marketers under the aegis of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) said higher fuel costs are increasing transport fares and the cost of goods.
The group also called for food subsidies and the adoption of alternative energy sources like CNG.
Source: Legit.ng
