Manufacturers dump diesel for gas as energy costs soar
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By Yinka Kolawole
Manufacturing firms across Nigeria are increasingly turning to natural gas as rising diesel prices continue to push up production costs and threaten profitability in the industrial sector.
Industry stakeholders said the shift has become necessary as manufacturers grapple with high energy costs, unstable power supply and foreign exchange pressures that have worsened the operating environment for businesses.
Chairman of the Board of the Niger Delta Chambers of Commerce, Industry, Trade, Mines and Agriculture, Idaere Gogo Ogan, said effective utilisation of gas could transform industrial operations and revive struggling businesses in the Niger Delta region.
Speaking through the Board Secretary, Chief Solomon Edebiri, at a business and investment forum organised by Shell Nigeria Gas in Port Harcourt, Rivers State, Ogan lamented that more than 500 companies in the Niger Delta had shut down operations in recent years due to harsh economic and operational conditions.
“Effective utilisation of gas can significantly reshape industrial practices and revive business activity in the region,” he stated.
The forum brought together stakeholders in the energy and manufacturing sectors to explore ways of reducing operating costs and improving productivity through gas adoption.
The growing shift toward gas-powered operations comes amid sustained increases in diesel prices, driven partly by tensions in the Middle East and volatility in global energy markets.
According to the environmental certification organisation, Gold Standard, developing countries account for between 350 gigawatts and 500 gigawatts of diesel generator capacity spread across an estimated 20 million to 30 million sites, with generator output in many cases exceeding the capacity of national grids.
The organisation noted that diesel-generated power remains expensive, averaging about $0.30 per kilowatt-hour and significantly higher in remote areas with poor electricity access. It added that annual global spending on generator fuel ranges between $30 billion and $50 billion.
At the forum, Shell Nigeria Gas disclosed that two new industrial customers – Intercontinental Distillers Limited II and Rumbu Industries Limited – had been added to its gas distribution network in Agbara, Ogun State.
The company said the development increased the number of firms using its gas solutions to more than 150 across Abia, Bayelsa, Ogun and Rivers states.
Speaking on behalf of the Managing Director of Shell Nigeria Gas, Ralph Gbobo, the company’s Head of Gas Distribution, Chukwuka Amos-Ejesi, said manufacturers switching to gas were already benefiting from lower and more stable energy costs.
According to him, firms adopting natural gas enjoy reduced exposure to volatile fuel prices, improved operational efficiency, better planning certainty and stronger competitiveness.
“Companies that transition to natural gas consistently benefit from lower and more predictable energy costs, reduced exposure to liquid fuel price volatility, enhanced operational uptime, improved planning certainty and a stronger competitive offering for their customers,” he said.
Shell Nigeria Gas added that natural gas offers both economic and environmental advantages over diesel, especially as manufacturers continue to battle soaring energy costs and unreliable electricity supply.
The company disclosed that gas supply to Intercontinental Distillers Limited II and Rumbu Industries Limited was equivalent to about four megawatts of electricity, a development expected to improve production efficiency and lower operating costs.
Stakeholders at the forum included representatives of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Bank of Industry, Manufacturers Association of Nigeria and the Port Harcourt Chamber of Commerce.
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