For years, Nigeria’s power sector has struggled with inefficiencies, forcing more than 60 percent of the country’s Manufacturing companies to seek Alternative Energy sources. To reverse this trend, the federal government has launched the National Integrated Electricity Policy (NIEP), a strategic plan to restructure the power industry and make national grid electricity reliable for industries. The government also released the Integrated Resource Plan (IRP) in collaboration with the United Kingdom Nigeria Infrastructure Advisory Facility (UKNIAF). These represent a notable step toward resolving the nation’s Energy Crisis and promoting Sustainable Solutions to longstanding power challenges that have hindered industrial growth.
Despite abundant energy resources, the Power Supply remains unreliable, leading to frequent blackouts. Many businesses resort to self-generation at exorbitant costs, pushing production expenses and making locally manufactured goods less competitive. The absence of a stable power supply continues to stifle Economic Growth and industrialisation, keeping the country’s business environment constrained. Gas supply inadequacies have compounded the problem, with several power plants unable to operate at full capacity due to Pipeline vandalism, payment issues, and regulatory hurdles.
Government outlines $32.8 billion investment strategy.
Recognising these challenges, the federal government has outlined a substantial Investment plan requiring $32.8 billion by 2030 to achieve universal electricity access. Of this amount, $17 billion is expected from Public Sector funding, while $15.8 billion will come from Private Sector investment. The push for investment is already yielding results, with nearly $2 billion injected into the sector last year across traditional electricity supply and renewable energy. As for liquidity challenges, the government has been implementing cost-reflective tariffs. Introducing the Band ‘A’ policy, which applies a higher tariff to customers receiving at least 20 hours of daily electricity, has increased the sector revenue.
Revenue has grown by 70 percent, from ₦1.05 trillion in 2023 to ₦1.7 trillion in 2024, demonstrating that commercialisation strategies can help stabilise the sector. The high cost of self-generated power has forced many manufacturing companies to disconnect from the national grid, despite operating in urban centers with theoretical grid access. The unreliable nature of supply has made electricity transmission an impractical option for industries requiring an uninterrupted power flow. Sensitive manufacturing processes cannot afford a momentary power dip, leading businesses to rely on expensive self-generation instead of taking the risk of unstable grid connections.
Power supply growth and grid expansion initiatives are underway.
Even with the existing challenges, there has been a 35 percent increase in power supply over the past year. The national grid’s generation capacity has risen from 4,200 MW in 2023 to 5,300 MW in 2024, with an additional 600 MW incorporated in the last 12 months. To sustain this momentum, significant infrastructure upgrades are being undertaken, including the expansion of substations, the replacement of aging transformers, and the installation of modern reactors. A major concern remains the country’s metering gap, with over six million customers lacking meters. With procurement processes underway, the government has earmarked ₦700 billion for metering projects.
By mid-year, at least three million new meters will be deployed, improving transparency and billing accuracy in the electricity market. On the financial aspect, the sector’s financial struggles persist, with Power Generation companies owed over ₦2 trillion and another ₦2 trillion in unpaid Subsidies for 2024 alone. These debts hinder Gencos’ ability to procure gas, maintain turbines, and sustain operations. With growing electricity consumption, government subsidy obligations are escalating, posing a financial strain that is no longer sustainable. The government has acknowledged that it cannot continue bearing the full weight of electricity subsidies.
Related Article: TCN updates on nationwide power restoration
Moving forward, the path forward involves deepening the commercial viability of the sector, ensuring it generates enough Revenue to sustain itself. The recent successes with the Band ‘A’ policy suggest that a gradual transition to cost-reflective Tariffs across all consumer categories could help resolve liquidity challenges and drive further power generation and distribution improvements. However, with ongoing investment and reforms, the electricity sector may finally begin to function as a catalyst for economic growth and industrial expansion rather than as a bottleneck to development.