Companies are being choked as fuel and energy prices soar.
Nigeria’s major companies spent N635.2 billion on power generation and utilization in 2023, a 41.5% Year – on – Year (YoY) increase from N448.76 billion in 2022. The majority of the expenditure was on diesel and independent power generation. The average retail price of Automotive Gas Oil increased by 37.76% from N817.86 in December 2022, while the average retail price of Premium Motor Spirit rose by 2258.85%. Companies like BUA Foods Plc, BUA Cement Plc, and Fidson Healthcare reported significant increases in power costs.
The rising petroleum prices and poor public power supply in the Philippines are causing increased production costs and negatively impacting business competitiveness and sustainability. Small businesses have closed, and experts suggest decentralization of the grid and amendment of the Power Reform Act to deter investors. Manufacturing firms are the most affected, with Livestock Feeds, BUA Foods, and Dangote Cement experiencing the highest energy cost increases.
Impact on companies
Okomu Oil Palm Plc a company in Nigeria, has faced a significant increase in energy costs due to rising diesel prices. The company’s Managing Director, Graham Hefer, stated that the 30% increase could be more, impacting the company’s cost of sales. However, he managed to buffer himself by installing a 5MW turbine using palm biomass. BUA Foods Plc also reported a 67% increase in cost of sales to N477.14 billion in 2023, driven by increased raw materials and energy costs. Lafarge Africa’s CEO, Lolu Alade-Akinyemi, also noted thatthe company’s performance in 2023 was largely impacted by inflation and unprecedented Naira devaluation, putting pressure on energy and supply chain costs. The power supply situation is worrisome for businesses, affecting profitability, competitiveness, sustainability, and the ability to reinvest and create new jobs
