Nigeria’s erratic power sector is pushing more manufacturers to off-grid solutions with Kitchen Vegetable Oil Limited disclosing that the transition reduced its energy cost by 50 per cent.

With repeated grid collapses despite the steady demand for essential goods, Nigerian manufacturers continue to face one of their toughest challenges – unreliable and expensive electricity.

With N1 trillion spent on alternative energy last year, the Aba-based manufacturer, in a release, said its transition to off-grid gas plants has leapfrogged its business.

The company, a subsidiary of Udeagbala Holdings, produces edible oils, soaps, skincare products, and PVC pipes.

Two years ago, it switched to a 1.7 megawatt (MW) gas plant to solve a persistent power supply challenge that was affecting production and damaging equipment.

Executive Director of the company, Ifeyinwa Udeagbala, said the high cost of grid electricity and frequent outages were unsustainable.

“The gas plant now provides cleaner, more reliable electricity and has reduced our operating costs. We only use diesel generators as backup,” she said.

The plant was delivered in partnership with Clarke Energy, which handled engineering design; supplied the Jenbacher gensets, commissioned the plant and continues to provide after-sales services.

The gas is sourced from a major international oil company’s pipeline, supplemented by compressed natural gas (CNG) from virtual pipeline suppliers.

But electricity is just one part of the challenges. Udeagbala said Nigerian manufacturers face a range of challenges from inflation and unstable raw material costs to limited access to affordable loans.

“We need significant capital to keep running, but high bank interest rates are cutting into profits and slowing growth,” she said.

She said counterfeit materials in the market, difficulties sourcing quality spare parts, import delays and a complicated tax system that adds to costs through multiple levies and inconsistent enforcement across states.

Despite the setbacks, the company continues to operate and employ over 200 staff.

“We feel a strong responsibility to keep our people in jobs, especially with the unemployment rate being so high,” Udeagbala said.

Looking forward, the company plans to expand into neighbouring African markets but is wary of trade bottlenecks.

“We are studying border policies and trying to manage risks like delays at checkpoints and spoilage of perishable goods,” she said.

Udeagbala credits the company’s resilience to a commitment to quality, strong supplier relationships, and careful screening of materials, adding: We have turned down poor-quality shipments to protect both our products and our equipment.”

Clarke Energy’s Managing Director for Sub-Saharan Africa, Yiannis Tsantilas, said Nigeria’s unreliable electricity is a major barrier to industrial growth.

“Energy costs can account for nearly 40 per cent of manufacturers’ expenses,” he said, citing data from the Manufacturers Association of Nigeria (MAN).

He noted that businesses like Kitchen Vegetable Oil are now taking control by investing in their energy sources.