Rising global fuel costs threaten profitability for firms already battling inflation, weak consumer demand and unreliable power supply……
Nigerian businesses are facing intensifying financial pressure as rising global energy prices drive up operating costs, prompting fresh concerns about the sustainability of many enterprises particularly small and medium-sized businesses.
According to the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, the latest surge in global energy prices, triggered by escalating geopolitical tensions in the Middle East, is worsening the cost burden on businesses across the country.
In a statement issued on March 15, 2026, Yusuf noted that the impact is especially severe in Nigeria, where companies rely heavily on petrol and diesel generators to power operations due to persistent electricity supply challenges.
With energy prices rising globally, businesses are now paying significantly more for fuel while also facing higher transportation and distribution costs. The combined effect, he said, is a sharp increase in operating expenses that is squeezing profit margins across multiple sectors of the economy.
“Businesses are already grappling with high inflation, elevated interest rates and weak consumer purchasing power,” Yusuf explained, noting that the latest increase in energy costs further complicates an already difficult operating environment.
He warned that without deliberate adjustments by businesses and supportive policy actions from government, the surge in energy prices could weaken business sustainability and slow economic growth.
Businesses urged to improve energy efficiency
One of the most immediate steps businesses can take, Yusuf noted, is to strengthen energy efficiency across their operations.
Companies were encouraged to carefully review their energy consumption patterns and implement measures that reduce waste while improving productivity per unit of energy used.
This includes optimising generator operating hours, deploying energy-efficient machinery, strengthening internal energy management practices and promoting energy conservation among staff.
According to Yusuf, even relatively small improvements in energy efficiency can significantly reduce fuel consumption and lower operating expenses.
Exploring alternative energy solutions
The CPPE boss also stressed the need for Nigerian businesses to gradually diversify their energy sources.
For many firms, heavy reliance on diesel and petrol generators has exposed them to fuel price volatility, making operational planning increasingly difficult.
To address this risk, Yusuf said businesses should explore alternative energy solutions such as solar power systems, hybrid energy arrangements combining solar with generators, and gas-powered generators where gas infrastructure is available.
While the initial investment may appear substantial, he argued that the long-term cost savings from renewable and hybrid energy solutions are becoming increasingly attractive in the face of persistently high fuel prices.
Logistics costs under pressure
Energy price shocks also tend to push up logistics and transportation costs, another area where businesses must improve efficiency.
Yusuf advised companies to review their logistics operations and identify opportunities to reduce fuel consumption.
Strategies such as consolidating deliveries, optimising transport routes, improving fleet management systems and using shared logistics platforms could significantly reduce transportation expenses.
He also pointed to the growing importance of digital platforms and remote transactions, which can reduce the need for physical movement and lower energy costs within supply chains.
Balancing pricing decisions
With operating costs rising sharply, businesses may have little choice but to adjust their pricing structures.
However, Yusuf cautioned that price increases must be handled carefully to avoid alienating customers in a market where consumer spending power is already weak.
Gradual price adjustments, stronger product value propositions and creative packaging strategies such as offering smaller product sizes can help firms maintain competitiveness while managing rising costs.
Strengthening financial resilience
Periods of energy price volatility often place pressure on business cash flow, particularly for smaller enterprises with limited financial reserves.
To remain resilient, Yusuf advised companies to strengthen financial management practices by cutting non-essential expenses, improving inventory management and renegotiating supplier payment terms where possible.
Maintaining sufficient liquidity buffers, he said, will help businesses absorb temporary cost shocks and maintain operational stability.
Collaboration among businesses
Another strategy highlighted by Yusuf is the use of cluster-based solutions among businesses operating within the same industrial areas.
Shared infrastructure such as joint power generation systems, shared logistics services and collective warehousing arrangements can reduce costs through economies of scale.
Collaborative approaches among SMEs, he said, can improve efficiency and resilience during periods of economic stress.
Policy actions needed from government
While businesses must adapt to rising energy costs, Yusuf also emphasised the need for supportive policy measures from government.
He urged authorities to expand fiscal incentives that encourage businesses to adopt renewable energy solutions.
Such measures could include tax incentives for solar installations, import duty waivers on renewable energy equipment and financial support for investments in energy-efficient technologies.
These incentives, he said, would help reduce the structural energy cost burden facing Nigerian businesses.
Financing the energy transition
Access to affordable financing remains one of the biggest barriers preventing SMEs from investing in alternative energy systems.
To address this challenge, Yusuf called on government, development finance institutions and commercial banks to establish dedicated financing windows for renewable energy investments.
Reducing financing costs, he said, would accelerate the transition toward cleaner and more affordable energy systems.
Strengthening domestic refining and power supply
Yusuf also highlighted the importance of expanding Nigeria’s domestic refining capacity as part of efforts to strengthen energy security.
A robust local refining ecosystem would reduce dependence on imported petroleum products and help shield the domestic economy from disruptions in global energy markets.
Beyond fuel supply stability, stronger domestic refining could also reduce the country’s foreign exchange demand for fuel imports, easing pressure on the exchange rate and improving Nigeria’s trade balance.
However, he stressed that the most sustainable solution to the country’s high energy cost environment lies in improving the reliability of grid electricity.
Expanding power generation capacity, strengthening transmission infrastructure and improving the efficiency of electricity distribution networks would significantly reduce businesses’ dependence on diesel and petrol generators.
Building resilience amid global shocks
For Yusuf, the current spike in global energy prices serves as a reminder of how vulnerable businesses and national economies remain to external shocks in global energy markets.
He argued that Nigeria can mitigate the impact of the current energy crisis through a combination of proactive business adaptation and supportive government policy.
By improving energy efficiency, diversifying power sources, strengthening financial management and accelerating reforms in the electricity and energy sectors, he said the country can build a more resilient and competitive business environment even in the face of global economic turbulence.
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