Business
Manufacturers seek 30% green tax credit to cut energy cost
By Yinka Kolawole
Manufacturers have called on the Federal Government to introduce a 30 per cent Green Investment Tax Credit for companies investing in renewable energy and hybrid power solutions, as rising energy costs continue to undermine industrial productivity and push up production costs.
Director General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, in the 2025 Annual Report of the association, said the proposed incentive would encourage manufacturers to transition to off-grid renewable energy and hybrid captive power systems, including solar and liquefied natural gas (LNG), to reduce their dependence on expensive and unstable energy sources.
The proposal comes as manufacturers’ annual expenditure on alternative energy rose by 20.72 per cent to N1.34 trillion in 2025, from N1.11 trillion in 2024, reflecting the growing burden of providing electricity for factory operations.
Ajayi-Kadir said the government needed to adopt targeted fiscal and energy-sector reforms to lower operating costs, improve industrial competitiveness and ease the inflationary pressures associated with expensive production.
He urged the government to recognise manufacturers as strategic users of gas and establish a stable and transparent gas pricing framework, while prioritising domestic supply before exports.
According to him, affordable and reliable energy is critical to the survival and expansion of local industries, particularly as manufacturers grapple with rising fuel prices, equipment maintenance costs and other operating expenses.
The MAN DG also called for the Nigerian Electricity Regulatory Commission (NERC) to prioritise Eligible Customer status for industrial clusters, enabling manufacturers to purchase electricity directly from generation companies through dedicated feeders.
“The proposed arrangement would expand access to more reliable electricity and reduce manufacturers’ dependence on costly self-generation,” he stated.
The association’s concerns are underscored by the sharp increase in the cost of alternative power in 2025, when diesel prices frequently ranged between N1,500 and N1,800 per litre across different parts of the country.
With unreliable public electricity supply, manufacturers have been compelled to absorb the higher costs of diesel and gas to keep their factories running, adding to production expenses and inflationary pressures.
Beyond fuel costs, the growing reliance on generators has also increased maintenance expenditure arising from continuous operation, equipment wear and tear.
MAN warned that the sector’s heavy dependence on diesel and gas leaves manufacturers vulnerable to fuel-price volatility and local supply-chain disruptions.
“The proposed 30 per cent tax credit is therefore expected to provide an incentive for investments in cleaner and more efficient energy systems, while helping manufacturers reduce long-term operating costs,” Ajayi-Kadir added.
He maintained that a combination of fiscal incentives, predictable gas pricing and improved access to industrial electricity would help ease the burden on manufacturers and strengthen the sector’s contribution to economic growth.
Industry stakeholders have repeatedly identified high energy costs as a major constraint on manufacturing competitiveness, with implications for investment, output, employment and the prices of locally produced goods.
