President Bola Tinubu has committed to prioritising domestic gas supply for Nigeria’s industrial clusters, arguing that the nation’s manufacturing sector cannot remain competitive or achieve sustainable growth without reliable and affordable energy. Speaking at a recent industrial summit, the President declared that his administration would shift focus toward ensuring that factories have the necessary power to drive production, stating that “no factory can compete in the dark.”
The announcement comes at a critical time for Nigerian manufacturers who have been grappled with soaring operational costs. The removal of the petrol subsidy and the liberalisation of the foreign exchange market have significantly increased the cost of imported fuels and energy equipment. By prioritising gas—a resource Nigeria possesses in abundance—the federal government aims to provide a cheaper, cleaner alternative to the expensive diesel and petrol currently powering much of the country’s industrial base.
The Manufacturers Association of Nigeria (MAN) has frequently cited energy costs as the single largest obstacle to industrial productivity, often accounting for 30% to 40% of total production expenses. The federal government’s new directive intends to bridge the gap between gas production and industrial consumption by fast-tracking infrastructure projects that connect gas fields directly to designated industrial zones across the country.
Currently, Nigeria holds over 200 trillion cubic feet of proven gas reserves, yet domestic supply remains constrained by inadequate pipeline networks and pricing disputes. The President’s directive is expected to empower the Ministry of Petroleum Resources (Gas) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to enforce domestic supply obligations, ensuring that producers allocate a specific portion of their output to the local market before pursuing export opportunities.
Addressing Infrastructure Gaps in Gas Distribution
A central component of this strategy involves the completion of major pipeline projects, such as the Ajaokuta-Kaduna-Kano (AKK) gas pipeline and various spur lines designed to feed industrial hubs in the south-east and south-west. The government intends to create “gas-backed” industrial parks where businesses can benefit from economies of scale. By clustering factories together, the cost of delivering gas and electricity is significantly reduced, making Nigerian-made goods more competitive in both local and international markets.
Industry experts suggest that this move is essential for Nigeria to take full advantage of the African Continental Free Trade Area (AfCFTA). Without a reduction in energy costs, Nigerian manufacturers risk being priced out by competitors from countries with more stable and cheaper power grids, such as Egypt or South Africa. The President noted that the transition to gas is not just an environmental necessity but a core economic strategy to preserve jobs and encourage new investment in the real sector.
The federal government is also looking to resolve long-standing issues regarding gas pricing. Manufacturers have previously complained that gas is often priced in US dollars, leading to volatile costs whenever the Naira fluctuates. The administration is reportedly reviewing a framework that would allow for more stable, Naira-indexed pricing for domestic industrial users to provide the predictability needed for long-term business planning.
The impact of this policy is expected to be felt most acutely in clusters such as Agbara in Ogun State, Nnewi in Anambra, and various zones in Kano and Lagos. These hubs host hundreds of SMEs and large-scale factories involved in everything from food processing to steel fabrication. Reliable gas supply would allow these firms to transition away from inefficient heavy fuel oil and diesel generators, potentially lowering production costs by as much as 25%.
Beyond the immediate benefits to manufacturing, the prioritisation of gas for industrial clusters aligns with Nigeria’s “Decade of Gas” initiative. This policy seeks to position gas as the primary driver of Nigeria’s industrialisation by 2030. However, the success of this latest presidential directive will depend heavily on the speed of infrastructure deployment and the ability of the government to provide the necessary security for pipelines, which have frequently been targets of vandalism in the Niger Delta.
The Ministry of Industry, Trade and Investment is expected to work alongside the Ministry of Petroleum Resources to identify the high-impact clusters that will receive priority status in the first phase of the rollout. Investors and factory owners are now awaiting a detailed implementation timetable and confirmation of the specific regulatory incentives that will be offered to companies willing to relocate or expand within these gas-powered zones.
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