…hits N1,840
Nigerian manufacturers face another jump in energy costs after Dangote Petroleum Refinery raised its gantry price for diesel to N1,840 a litre, from N1,800, effective Wednesday, October 28, 2026.
The N40 increase is about 2.2 per cent and falls on factories that burn diesel to compensate for an unreliable power grid, adding to an already stretched cost base.
BusinessDay’s findings showed Dangote Refinery’s group commercial operations sent a circular to customers announcing the revised price and directed buyers to return all existing Authority to Collect (ATC) documents for repricing. It added that the company will issue new volume contracts so loading can resume immediately at the new price.
Depot prices for automotive gas oil, as diesel is formally known, vary by location. Checks by BusinessDay showed T.Time, Menj and Ibachem are offering diesel at N1,840 per litre in Lagos. In Warri, Rain Oil and Prudent listed the product at N1,890.
Marketers said the gantry increase will raise procurement costs for them and for bulk buyers, with consequences for distribution margins and pump prices. Some marketers now expect a further rise in diesel prices.
Diesel is a core input rather than a back-up for manufacturers as grid supply remains erratic, forcing many factories to run generators for the most part of the working day.
The Manufacturers Association of Nigeria (MAN) estimated that members spent N1.35 trillion on alternative energy in 2025, a 23 per cent jump from N1.1 trillion in 2024, as the rising cost of keeping factories running continues to erode resources.
“The estimates reflect the enormous financial burden imposed by unreliable public power supply, inadequate energy infrastructure and unbearably high energy prices,” Francis Meshioye, immediate past president of MAN, said at an industry engagement in Lagos.
The former MAN boss argued that the growing dependence on self-generated electricity had become one of the single largest cost drivers for the nation’s manufacturers.
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He lamented that the absence of reliable energy had continued to erode profitability, weaken competitiveness, and discourage fresh investments.
“History offers no example of an industrialised nation whose factories are powered principally by privately- generated electricity,” he stated.
Femi Egbesola, national president of the Association of Small Business Owners of Nigeria, said small firms now spend more than 80 per cent of their profit on alternative energy, up from more than 40 per cent.
“Electricity supply is going from bad to worse,” he said, adding that generators are no longer a workable option for many businesses.
The rising cost of diesel threatens to further squeeze profit margins for businesses that have limited capacity to pass higher operating expenses to consumers.
Manufacturers already contend with elevated raw material costs, foreign exchange volatility, transportation expenses and weak consumer purchasing power. Higher energy prices could make it more difficult to maintain production levels without adjusting selling prices.
For companies operating in competitive markets, passing on the full increase may not be possible without risking lower sales.
The implications extend beyond individual factories. Manufacturing remains an important source of employment, industrial output and demand for locally produced goods, meaning persistent energy cost increases could affect wider economic activity.
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While some businesses are exploring solar power, embedded generation and other alternatives, the transition requires significant upfront investment and may not immediately replace diesel-powered generation for energy-intensive operations.
The latest price adjustment also raises questions about the sustainability of manufacturers’ energy spending, particularly as businesses continue to rely on privately generated electricity to compensate for shortcomings in public power supply.
With diesel prices already approaching N2,000 per litre in some distribution locations, the cost of running factories could rise further if marketers pass on additional procurement expenses.
Business owners said a generator is only viable when the fuel that feeds it costs less than the sales it keeps alive.
“As diesel climbs, that margin narrows, and smaller operators have less room to absorb it than larger competitors with more scale and better access to credit,” said Egbesola.
Manufacturers have two broad choices when energy costs rise. They can absorb the increase and accept thinner margins, or they can raise prices. Neither is comfortable.
Consumers are already watching their budgets, and a producer that raises prices risks losing shelf space to rivals or imports. A producer that holds prices risks running at a loss.
Larger firms can sometimes spread the hit across product lines or negotiate better terms with suppliers. Small businesses rarely have that option.
Egbesola’s figures suggest many of them are already close to the edge, with energy taking most of what they earn.
The N40 move may look modest against the N1,800 base. But diesel is a recurring expense, bought week after week in large quantities. A small increase on a large volume adds up quickly, and it comes on top of earlier rises that manufacturers say they have not yet recovered from.
The next signal will come from the depots and the pumps. Marketers who expect further increases will be watching how quickly the new gantry price filters down to retail. Bulk buyers, including factories, will feel it first, since they buy at or near the gantry level.
Dipo Oladehinde is a skilled energy analyst with experience across Nigeria's energy sector alongside relevant know-how about Nigeria’s macro economy. He provides a blend of market intelligence, financial analysis, industry insight, micro and macro-level analysis of a wide range of local and international issues as well as informed technical rudiments for policy-making and private directions.
