Manufacturers Request 30% Tax Credit to Lower Energy Costs in Nigeria

Nigerian manufacturers are asking the Federal Government to introduce a 30% Green Investment Tax Credit. This credit would help companies that invest in renewable energy and hybrid power solutions. They believe this move is essential as rising energy costs are hurting industrial productivity and increasing production expenses.

Segun Ajayi-Kadir, the Director General of the Manufacturers Association of Nigeria (MAN), shared these views in the association’s 2025 Annual Report. He explained that the proposed tax credit would encourage manufacturers to switch to off-grid renewable energy sources, like solar and liquefied natural gas (LNG). This shift aims to reduce reliance on expensive and unstable energy supplies.

In 2025, manufacturers’ spending on alternative energy rose significantly, reaching about N1.34 trillion, up from N1.11 trillion in 2024. This increase highlights the growing challenge of securing electricity for factory operations. Ajayi-Kadir emphasized the need for the government to implement specific reforms in fiscal and energy sectors to lower operating costs and improve competitiveness.

He also called for the government to recognize manufacturers as key users of gas, suggesting the establishment of a stable pricing system that prioritizes domestic supply over exports. Affordable and reliable energy is crucial for the survival and growth of local industries, especially as manufacturers face rising fuel prices and maintenance costs.

Additionally, Ajayi-Kadir urged the Nigerian Electricity Regulatory Commission (NERC) to allow industrial clusters to buy electricity directly from generation companies. This would provide more reliable electricity and lessen the need for costly self-generated power.

The association’s concerns are reflected in the sharp rise in alternative power costs in 2025, with diesel prices often between N1,500 and N1,800 per litre. Due to unreliable public electricity, manufacturers have had to cover higher diesel and gas costs, further increasing production expenses and inflation.

MAN warns that the heavy reliance on diesel and gas makes manufacturers vulnerable to fluctuations in fuel prices and disruptions in local supply chains. The proposed tax credit is seen as a way to encourage investments in cleaner energy systems and help manufacturers lower their long-term costs.