LCCI Urges Government to Address Escalating Energy Costs to Maintain Inflation Stability

The Lagos Chamber of Commerce and Industry (LCCI) has called on the Federal Government to take urgent and decisive action to tackle the country’s rising energy costs, warning that failure to do so could undermine recent progress in moderating inflation. The Chamber emphasized that the sharp increase in fuel, electricity, and logistics costs continues to exert significant pressure on production, transportation, and household spending, threatening Nigeria’s fragile economic recovery.

In a statement released by its Director-General, Dr. Chinyere Almona, the LCCI noted that although Nigeria’s inflation rate has shown signs of easing over recent months, the sustainability of that trend largely depends on stabilizing energy prices and ensuring consistent power supply to reduce production costs for businesses.

“The recent moderation in inflation is a welcome development, but sustaining it will require bold policy measures to address persistent energy price shocks,” Almona stated. “Energy is a major input across all sectors, and as long as its cost remains high and unstable, it will continue to transmit inflationary pressures throughout the economy.”

According to the National Bureau of Statistics (NBS), Nigeria’s headline inflation has slowed slightly after months of acceleration driven by higher food, fuel, and transportation costs. However, core inflation remains elevated, reflecting deep-seated structural issues such as high energy costs, poor infrastructure, and inefficiencies in the supply chain.

The LCCI argued that the current high cost of diesel, petrol, and electricity has raised the cost of doing business, particularly for manufacturers, transporters, and small enterprises that rely heavily on generators due to unreliable grid supply. Almona stressed that unless urgent reforms are implemented, businesses could struggle to remain competitive, while consumers will continue to face rising prices of goods and services.

“Manufacturers are being squeezed by rising input costs and weak consumer purchasing power. Many companies are forced to either reduce output or pass the additional costs to consumers. This cycle, if left unchecked, could reverse the gains recently recorded in inflation moderation,” she warned.

The Chamber recommended a comprehensive review of Nigeria’s energy pricing and supply frameworks to ensure transparency, competition, and affordability. It also urged the Federal Government to incentivize investments in alternative and renewable energy sources to reduce dependence on imported fuels and volatile global oil prices.

“The government must prioritize domestic refining, promote gas utilization, and incentivize solar and other renewable energy options. Energy diversification is not only an environmental imperative but an economic necessity,” the LCCI said.

Dr. Almona also urged the Nigerian Electricity Regulatory Commission (NERC) to revisit the current electricity tariff structure, which has become unsustainable for many small and medium-sized enterprises (SMEs). She noted that the high cost of electricity has discouraged industrial expansion and reduced productivity, particularly in manufacturing hubs such as Lagos, Ogun, and Kano.

“Power sector reforms must move beyond policy statements to practical implementation. The current tariff regime is strangling productivity and undermining competitiveness,” she added.

The Chamber further advised the government to improve infrastructure around transportation and logistics, especially in the petroleum and manufacturing sectors, to curb additional costs associated with product distribution.

Economists have echoed LCCI’s warning, emphasizing that the relationship between energy prices and inflation remains strong in Nigeria’s import-dependent economy. They cautioned that sustained high energy costs could erode consumer welfare and offset monetary policy gains achieved by the Central Bank of Nigeria (CBN).

Professor Bismarck Rewane, Managing Director of Financial Derivatives Company Limited, said Nigeria’s inflation dynamics are now “cost-driven rather than demand-driven,” meaning that unless energy costs fall, price moderation will be short-lived.

“The CBN’s tightening measures may slow inflation marginally, but without addressing structural cost drivers like fuel, power, and logistics, inflation will remain sticky,” Rewane explained.

Similarly, economist Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), stated that government must balance its inflation management strategy with policies that enhance productivity and reduce operational costs.

“The solution lies in tackling cost-push factors. If we fix energy, transportation, and infrastructure, inflation will respond positively without stifling growth,” Yusuf said.

The LCCI also called for greater engagement between policymakers and private sector operators to craft sustainable solutions that support both inflation control and economic expansion. The Chamber reiterated that a holistic approach combining fiscal discipline, energy sector reform, and infrastructure development is vital to achieving long-term price stability.

“The goal should not only be to reduce inflation numbers on paper but to make life truly affordable for Nigerians and enable businesses to thrive,” Almona concluded.

 

With Nigeria’s economy still recovering from the shocks of subsidy removal, exchange rate volatility, and high global energy costs, the LCCI’s warning underscores the urgency for coordinated policy action. Analysts agree that stabilizing energy costs could be the key to sustaining the downward inflation trend while fostering growth and job creation in the months ahead.