The Diesel Price Surge in Nigeria: Where We Stand

As of May 2025, Nigeria’s average retail diesel price climbed to about ₦1,758 per litre, up from ₦1,404 in May 2024 - a jump of over 25  percent year‑on‑year. Several northern states, such as Benue, Adamawa, and Plateau, reported prices as high as ₦2,400 per litre.

By late June, reported typical rates were between ₦1,350 and ₦1,550/litre - with black market and regional variations pushing that even higher.

With subsidies long removed for diesel, the fuel is entirely market‑driven, susceptible to global crude oil fluctuations, currency depreciation, logistics costs, and distribution inefficiencies.

Why Prices Have Climbed So Sharply

1. Global oil volatility and currency depreciation: Nigeria’s reliance on imports for refined diesel means that rising global crude prices (e.g. during 2022 or 2024–25) and a weak Naira directly inflate local fuel costs.

2. Inadequate refining capacity: Despite the emergence of the Dangote Refinery (500–650k barrels per day capacity), most domestic refineries remain under‑utilised, forcing continued reliance on imports.

3. Increase in petrol prices: there has been a deregulation of pricing which has increased the cost of diesel, leading to large swings during global price shocks.

4. Supply chain inefficiencies and black market distortions: Logistics, fuel theft, hoarding, and smuggling further distort supply causing price spikes or regional price variability.

Ripple Effects: Impact on Individuals and Businesses

Households and individuals

• Transport inflation: Public transport fares have tripled in cities like Lagos, driven by diesel price pass‑through in logistics and operations.

• Utility generation costs: With unreliable grid power, many Nigerians rely on diesel generators - often paying ₦1,400–₦1,800 per litre—for lighting, cooking, and charging. That adds up fast.

• Stress on basic expenses: With inflation already running about 23  percent in May  2025, rising diesel costs deepen financial strain on low‑income households.

  
  

Small and medium enterprises (SMEs)

• Operating costs soared: Restaurants, workshops, shops - almost all SMEs rely on diesel gensets to stay open. Higher fuel price eats into profit margins or forces closures.

• Product cost inflation: Transport-intensive sectors like retail and agriculture pass costs down - raising prices of food and consumer goods.

  
  

Larger firms and industry

• Energy cost burden: Generators fill the gap for grid shortfalls, despite Nigeria generating just ~4 GW of available 12.5 GW capacity, leaving many companies to self‑generate up to 48  percent of their power use.

• Eroded competitiveness: Energy inefficiencies affect margins, not only due to fuel cost but also maintenance, downtime, and noise/pollution.

  
  

A Solution Path: Monitor, Manage, and Future‑Proof Fuel Use

1. Implement fuel‑use monitoring

• Meter fuel consumption: Use an energy monitoring system, flow meters or daily logs for each generator set-record fuel input vs. run hours, load, and purpose.

• Track usage by task or department: Allocate fuel to specific functions (e.g., critical servers, production) to identify high‑use centres.

• Fuel budgeting & variance tracking: Compare actual vs projected fuel usage monthly and investigate large variances.

  
  

These steps empower both individuals and businesses to spot inefficiencies (e.g. gensets idling when grid is available) and eliminate waste. Many of these processes can be automated with the use of an effective energy management tool such as enee.io.

2. Profile energy consumption

• Audit electrical loads: Document what loads run on diesel gensets - lighting, appliances, machinery - and their power use over time.

• Establish “energy profiles”: Create baseline usage patterns (e.g. average daily kWh by load, by hour). This helps predict fuel needed and identify peaks. Energy profiling can be provided autmatically using the enee.io platform.

• Model different scenarios: Use profiling data to assess cost savings by shifting load (e.g. high‑energy tasks) outside peak diesel periods.

  
  

Profiling isn’t just record‑keeping. It builds a data‑driven bridge to future improvements like solar hybrid systems.

3. Optimize genset operation

• Schedule maintenance and peak loads: Ensure gensets run at optimal load (50‑75 percent) to maximize efficiency - avoid frequent low‑load running which wastes fuel.

• Use multiple smaller, efficient units: Instead of one oversized set, multiple right‑sized generators can match diverse load profiles more efficiently.

• Implement auto start/stop systems: Use automatic controllers to guarantee generators only operate during power cuts or when runs exceed a minimum efficient load.

• Improve site practices: Turn off non-essential loads during outages, encourage energy‑saving behaviours (LED bulbs, timers, efficient appliances).

  
  

The Solar Lift: If Diesel Prices Keep Rising

Nigeria is already seeing surging demand for solar equipment as businesses seek to reduce diesel dependence. Yet overall solar penetration remains low - below 2  percent by some estimates - due to supply, financing, and adoption barriers.

Why energy profiling helps solar adoption

Profiling establishes your exact energy needs: average daily kWh, peak loads, duration, and load type (lighting vs motors). From this you can:

• Design appropriately sized solar + battery + genset hybrid systems rather than over‑investing.

• Estimate diesel fuel offset: If solar supplies 6 kWh/day, you can calculate how much diesel (and cost) you avoid per month.

• Project payback period: Combine fuel savings and equipment costs to forecast how long it takes for solar investments to pay off—often in 3–5 years depending on diesel cost and system size.

  
  

Scalable solar models for businesses and homes

• For households or small businesses: Solar home systems (~200–500 W PV with battery) reduce or eliminate lighting and small appliance power costs.

• For industrial/commercial clusters: Solar + battery mini‑grids sized at tens to hundreds of kW can cover major loads—saving millions in diesel annually.

  
  

Government and development partners have committed to deploying thousands of mini‑grids and solar systems to reach energy access goals by 2030.

Challenges and How to Overcome Them

Challenge	Mitigation
High upfront capital cost	Consider pay‑as‑you‑go solar financing or leasing models; tap into REA grants or development financing programs.
Supply delays and quality concerns	Work with vetted local solar suppliers and installers. Demand warranties and local service.
Lack of data to assess potential	Start simple with consumption logs and load hours - progressively refine with smart meters or monitoring tools.
Business does not understand solar benefit	Use energy profiling to show exact savings from avoided diesel; a tangible fuel‑cost comparison can drive decision.

Final Thoughts

Diesel in Nigeria is no longer a predictable commodity - its price increasingly volatile and unpredictable. As of mid‑2025, you’re paying ₦1,500–₦1,800 per litre, with many paying more in northern states. That’s heavy pressure on businesses and households reliant on generators for essential electricity.

But you don’t have to be stuck paying rising fuel bills. By tracking fuel use, building an energy profile, and optimising genset operations, you can take control of your energy spend. From there, you can prepare for or begin a shift to solar + battery systems, transforming high diesel bills into sustainable, clean solar energy.

If diesel continues its upward trend - or stays volatile - the ROI on solar only becomes stronger. Energy profiling becomes the bridge: it lets you understand your current usage, model future savings, and move forward with confidence.

In a world of rising fuel costs, the first step is data: track, understand, and optimise. The next step is action - invest in clean, affordable alternatives. Diesel may be surging - but with the right approach, you don’t have to run on rising costs.