• Three listed companies incur nearly N500b in energy cost in H1, 2025
Shareholders have raised concerns over the escalating cost of energy in Nigeria, warning that the development is threatening the fragile recovery of manufacturing companies, particularly those in the fast-moving consumer goods (FMCG) sector, whose profits had earlier been eroded by foreign exchange (FX) losses.
According to them, unless urgent measures are taken by the government to address the country’s worsening energy crisis, the ability of the firms to return fully to profitability, resume dividend payments and deliver value to investors will remain under strain.
The concern stems from the financial performance of listed companies for the half-year 2025, which revealed that energy expenses have become one of the most significant drags on profitability.
The shareholders explained that while some firms have just begun to record marginal profits after years of losses induced by foreign exchange shocks, the rising cost of generating energy is wiping out the gains and complicating their path to recovery.
They argued that for firms already struggling with FX illiquidity, high borrowing costs and imported inflation, the surge in energy costs has become an additional burden that threatens to stall recent improvements in performance.
Three listed firms – Dangote Cement, BUA Cement and Cutix – expended a total of N467.65 billion in energy costs in the first half of 2025
Dangote Cement’s energy cost rose from N157 billion in the first half of 2023 to N374 billion in the same period of 2024. The figure increased further to N387 billion in the first half of 2025, underscoring the scale of the challenge faced by energy-intensive manufacturers.
Similarly, BUA Cement’s energy cost rose from N70.47 billion in the first half of 2024 to N77.90 billion in the corresponding period of 2025, reflecting the pressure across the industry.
Even smaller manufacturers are not insulated. Cutix Plc, a cable manufacturing company, spent as much as N650 million on energy in the first half of 2025 compared with N420 million incurred in 2024 and N217 million in 2023.
For a medium-sized manufacturer, such steep increases in production cost threaten to erode profitability and limit the ability to reinvest in expansion or pay dividends.
The shareholders further argued that this trend has persisted for years, forcing many FMCG firms to suspend dividend payments for more than four years despite their historical reputation for consistent returns to investors.
According to an independent investor, Amaechi Egbo, the spiraling energy costs are not occurring in isolation but are compounded by foreign exchange volatility, rising raw material prices, and an uncertain policy environment.
He pointed out that these factors are forcing companies to dedicate a disproportionate share of their revenues to sustaining daily operations rather than financing growth initiatives, developing new products, or rewarding investors.
Egbo cautioned that if left unchecked, the situation would not only erode shareholder value but also dampen investor confidence in Nigeria’s manufacturing sector at a time when the economy is heavily reliant on private capital to stimulate growth.
He argued that a resolution to the energy crisis is critical for reviving the FMCG sector, which has been among the hardest hit by recent macroeconomic headwinds.
Therefore, Egbo stressed the need for the government to take decisive action to stabilise energy supply and reduce costs, whether through improved power generation and distribution, targeted subsidies for industrial users, or incentives for renewable energy adoption.
“Without such interventions, the fragile recovery seen in the half-year 2025 results may falter, with broader implications for investor sentiment, job creation, and the long-term growth trajectory of Nigeria’s real sector,” he added.
President of the New Dimension Shareholders Association of Nigeria, Patrick Ajudua, warned that rising energy costs remain one of the most significant burdens on the manufacturing sector, steadily eroding profitability and weakening the value chain.
According to him, energy alone now takes up a disproportionately large share of production expenses, and its direct consequence is higher product prices, which, in most cases, are inevitably transferred to consumers.
The ripple effect, he stressed, is reduced sales volumes as products become less affordable, while companies struggle with thinning margins that ultimately rob shareholders of dividends.
Ajudua explained that the impact goes beyond company balance sheets, as listed firms play a critical role in Nigeria’s economic development through job creation, payment of value-added tax and corporate taxes, as well as statutory deductions that support government revenue.
With such companies already contributing significantly to national growth, he argued that the government has a responsibility to shield the sector from collapse by offering targeted reliefs. One key measure, he proposed, is the introduction of adjusted, lower energy tariffs for manufacturers.
He noted that such an incentive would trigger a multiplier effect by improving profitability levels, boosting returns to investors, restoring confidence in dividend payments, and strengthening the capacity of companies to sustain jobs.
He emphasised that easing the energy burden on manufacturers would provide much-needed security for the economy by addressing unemployment and its attendant social consequences.
Team Lead, Finance Research Department at InvestingPort, Uwem Olubummo, said that the persistent rise in production costs, especially energy expenses, is leaving a significant imprint on the operations of listed companies in Nigeria.
She explained that energy has become one of the largest contributors to operating expenses, and its steady increase not only compresses profit margins but also reduces the cash flow available for reinvestment and expansion.
According to her, this situation forces companies to rethink their pricing strategies, often leading to higher product prices in the market, which can affect sales and competitiveness.
Olubummo stressed that to remain resilient, many firms may be compelled to implement efficiency-enhancing measures, explore alternative energy sources, or adjust their operational strategies to keep their cost structures manageable.
