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Nigeria’s largest listed companies spent nearly four times more on energy in the first half of 2026 than a year earlier, as rising fuel prices and unreliable grid electricity drive up operating costs and threaten profit margins.

Seven of the Nigerian Exchange’s top 30 listed companies that disclosed energy expenditure recorded combined spending of N12.72 billion in January to June, up from N3.32 billion in the same period of 2025, according to data compiled by BusinessDay from their financial reports.

The figures represent an increase of about 283 percent, highlighting how Nigeria’s electricity shortfall is feeding into corporate accounts and raising the cost of doing business across manufacturing, consumer goods, banking and energy.

The companies surveyed cut across manufacturing, consumer goods, banking and energy. They include Dangote Cement, BUA Foods, HBM Nigeria, UAC, First Holdings, Zenith Bank and Aradel Holdings.

The surge comes as businesses contend with an electricity system that struggles to deliver reliable power, forcing companies to rely on diesel generators, gas-fired plants and other alternative sources to keep operations running.

‘The rising energy burden underscores a deeper problem facing Nigeria’s private sector: companies are increasingly required to spend more simply to maintain existing levels of production and service delivery, rather than directing those resources towards expansion,’ Jovita Eiyike, an analyst covering the Nigerian consumer goods sector, said.

Eiyike added, ‘The resulting pressure could weaken earnings, constrain investment and make Nigerian businesses less competitive, particularly as manufacturers struggle to pass higher operating costs on to consumers already facing elevated living expenses.’

How energy costs increased for companies

Aradel Holdings posted the sharpest increase. Its spending on fuel and utilities climbed to N10.28 billion from N1.45 billion a year earlier, a rise of more than 600 percent.

BUA Foods’ energy bill rose 50 percent to N589.34 million from N392.71 million. UAC, another consumer-goods company, reported energy costs of N1.22 billion, up from N971.98 million.

Financial institutions recorded smaller increases in energy expenditure than manufacturers, but their reliance on uninterrupted electricity makes them particularly vulnerable to supply disruptions.

Zenith Bank’s energy spending rose 11 percent to N79.69 million from N71.72 million. First Holdings, the parent of First Bank of Nigeria, reported N22.45 million, up from N21.31 million.

Although the increases were more modest, banks face a different set of operational pressures. Banks’ extensive branch networks, automated teller machines, transaction infrastructure and data centres require continuous electricity to support financial services.

BusinessDay’s findings showed Nigeria’s electricity supply challenges have long forced businesses to invest in alternative power sources.

However, the cost of operating generators has increased as diesel and other fuels become more expensive, creating an additional burden for companies already facing elevated production costs.

The impact is particularly significant for food manufacturers, whose operations often depend on uninterrupted power to maintain production lines and preserve raw materials.

Luqman Agboola, head of research at Sofidam Capital, said the rise in energy expenditure could affect earnings if companies cannot pass the additional costs to consumers.

‘Energy costs are becoming a critical determinant of profitability,’ the analyst said.

Leye Kupoluyi, president of Lagos Chamber of Commerce and Industry (LCCI), Nigeria’s largest business think tank, said energy costs remain the most significant constraint, stating that sharp increases in petrol and diesel prices in 2026 raised costs of operating generators, transporting goods and distributing products, amid high electricity tariffs and logistics costs.

Kupoluyi said the high upfront costs of solar systems, battery storage, gas conversion equipment and energy-efficient machinery remained significant barriers to cleaner energy adoption among businesses.

He observed that unreliable electricity supply had forced many enterprises to depend on petrol and diesel generators, exposing them to fluctuating fuel prices, high maintenance costs and production disruptions.

According to him, improving energy affordability would require investment in gas gathering and processing facilities, transportation infrastructure, distribution networks and storage systems to connect Nigeria’s gas resources with the businesses that need reliable energy.

He also advocated targeted tax incentives, accelerated capital allowances and reduced import-related costs for qualifying clean energy equipment to encourage wider adoption.

The LCCI president stressed that expanding the national electricity grid alone would not immediately meet the energy needs of all SMEs.

Kupoluyi maintained that Nigeria’s energy transition should accommodate different technologies, including natural gas, solar power and battery storage, depending on their affordability and suitability for businesses.

The CBN’s January 2027 deadline is not just a test of where payment records are stored. It is a test of whether domestic infrastructure can protect them.

In June, during a visit to Lagos, I asked the chief technology officer of a Nigerian bank a simple question: where does your payment data actually live? His answer was straightforward: in a cloud region outside Nigeria.

That was not necessarily a poor choice. Overseas cloud regions can offer mature security controls, scalable capacity and resilience. But on 15 June 2026, the Central Bank of Nigeria (CBN) directed financial institutions and payment participants to ensure that transaction data generated in Nigeria is stored and managed in Nigeria. Compliance is required by 1 January 2027, a deadline the CBN reaffirmed in October.

The aim is understandable: greater control over a payment system central to daily economic life. Yet, moving data across a border does not automatically make it safer. Nigeria must prove that the infrastructure receiving it is secure, resilient and independently verifiable.

Beyond the location of a database

The directive covers banks, mobile-money operators, payment processors and other licensed participants. Its crucial words are ‘stored and managed’. A payment generates more than one record: primary databases, backups, transaction logs, fraud-monitoring systems, analytics services and audit trails may all handle related information.

At an October industry roundtable, the CBN reportedly emphasised logs, metadata and supporting systems, and recommended auditing and classifying data before migration, testing and independent verification. That is the right approach. Moving the primary database locally while leaving critical copies or processes offshore may not answer the regulator’s question.

What assurance actually requires

In data-centre assurance, I have supported audits for regulated organisations and helped demonstrate how facilities safeguard customer workloads. The recurring lesson is that a cloud-region name is a promise; documented evidence makes it credible.

Behind every cloud service are buildings, power systems, cooling equipment, connectivity, access controls, staff and subcontractors. Institutions need to ask: who can access the facility or administer the system? What happens during an outage? Can an independent auditor inspect the controls and test the supporting evidence?

Europe’s Digital Operational Resilience Act offers a useful comparison. Financial-sector technology contracts must identify relevant service and data locations and, for critical or important functions, provide substantial audit and inspection rights. Nigeria’s payment-data rule is more location-specific, but the assurance principle remains: the new address must come with proof.

An economic opportunity, with real risks

The stakes are substantial. NIBSS figures reported by BusinessDay put Nigerian instant-payment transactions at approximately ?1.07 quadrillion in 2024. Payment infrastructure is therefore essential to households, businesses and economic confidence.

Localisation could generate sustained demand for Nigerian data centres, engineers, cybersecurity specialists, independent auditors and domestic suppliers. It could also create a case for investment in additional facilities and digital skills.

But localisation can introduce new concentrations of risk. Unreliable electricity, inadequate cooling, limited fibre-route diversity and poorly separated recovery sites can undermine availability. A backup facility exposed to the same power or connectivity failure is not meaningful resilience. Government, operators and investors must expand capacity without lowering standards.

Five questions institutions must answer

First, where does payment data travel? Map production systems, replicas, backups, logs, testing environments and third-party services, rather than relying on a single hosting declaration.

Second, what does ‘managed’ mean? Document privileged access, remote support, subcontractors and administrative responsibilities. Seek written guidance from the CBN where interpretation remains uncertain.

Third, can facilities withstand disruption? Evaluate power, cooling, network diversity, incident response and geographically separated recovery arrangements.

Fourth, what evidence supports the claims? Obtain independent assurance reports, physical-security documentation, supplier disclosures and enforceable inspection rights. Certifications matter, but they should not replace an assessment of the actual operating environment.

Fifth, who verifies the outcome? Migration teams should test continuity and data integrity, while an independent assurance function examines compliance. A hurried transition that disrupts payments would undermine the policy’s purpose.

Turn the deadline into a lasting standard.

Important questions still require clarity, including offshore processing, disaster-recovery copies and remote administration. Institutions must also consider Nigeria’s data protection obligations. These details matter when designing systems that will operate long after January 2027.

Nevertheless, sovereignty cannot be measured by geography alone. A payment record held domestically but exposed to weak security, poor recovery arrangements or limited oversight is not automatically safer.

The CBN deadline should become a catalyst for stronger national infrastructure and rigorous assurance. In June, I asked where a bank’s payment data lived. The better question for 2027 is whether Nigeria can prove that the data is safe where it lives.