Electricity transmission pylons crossing open land

Market note, 31 August 2026. Tariff and fuel figures move; rebuild these with your own current numbers.

With Brent around $90 a barrel, the cost of running a factory on diesel is heading in one direction, and it is worth knowing what that does to a comparison most manufacturers have never actually made.

The arithmetic, in the open

A decent generator produces somewhere between 3.0 and 3.5 kilowatt-hours from a litre of diesel at reasonable load. So your cost per kilowatt-hour is the pump price divided by roughly three. At around 907 naira a litre earlier in 2026, that put self-generated power at roughly 260 to 300 naira per kilowatt-hour. Band A grid supply has been running at 209.50 naira per kilowatt-hour across most distribution companies, and 160 on EEDC. So grid power, where you can actually get it, was already the cheaper option. Not dramatically, but consistently.

What a higher crude price does to that

It widens the gap. Diesel is a refined product, so the pump price follows crude with a short lag. Grid tariffs are set by regulation and move on a different, slower cycle. When crude rises, the generator side of the comparison moves first and moves further. The practical consequence is that every hour you can take from the grid instead of the generator is worth more this month than it was last month.

Why so many factories get this wrong

Because diesel gets treated as simply the cost of doing business in Nigeria, and nobody calculates it. The generator is reliable and it is there, so it runs. The grid is unreliable, so it gets discounted mentally even during the hours it is available. Over a year on a continuously running extruder or compressor, that habit is expensive.

Three things worth doing this week

Find out which tariff band you are actually on. A surprising number of businesses do not know, and the difference between bands is large. Work out your own cost per kilowatt-hour on both sources, using your real diesel price and your generator’s real consumption at your real load, not the manufacturer’s figure. And when you specify new equipment, ask for connected load in kilowatts, not just the machine price. That number decides your cable sizing, your starter, whether your generator can carry the machine alongside everything else, and what it costs you every hour it runs. It has stopped more installations than any other single figure on a specification sheet.

Specifying equipment? We put connected load and running cost into the comparison alongside the purchase price, because the cheapest machine to buy is often not the cheapest to own. Get in touch.