Nigeria spends N40tn annually due to power outages, system operator warns

Nigeria is estimated to lose N40tn annually due to erratic electricity supply, the Nigerian Independent System Operator (NISO) has said, underscoring the severe impact of unreliable electricity supply on economic growth, industrial output and employment.

In its latest industry report, the Federal Government agency identified chronic power outages as a major drag on productivity, and noted that businesses and households are forced to bear huge costs by generating their own electricity.

According to the operator, financial losses due to unreliable electricity supply amount to about $29 billion annually, which translates to about N40.1 trillion at the prevailing exchange rate of N1.385 to the dollar.

“Reliable electricity is one of Nigeria’s most important economic priorities. Power outages cost Nigeria an estimated $29 billion each year. Businesses, manufacturers and households spend billions of dollars each year to generate their own electricity,” the system operator said in its latest industry report.

The report emphasizes that ensuring a stable electricity supply can significantly boost the economy, adding that “a stable national grid unlocks the key to economic growth, industrial productivity and job creation”.

Although Nigeria has enormous generation potential, NISO states that only a small portion of electricity production actually reaches consumers due to systemic inefficiencies across the electricity value chain.

It revealed that although the country produces between 45,000 and 50,000 megawatts every day, the national electricity grid is only capable of delivering about 5,000 megawatts—only 10 percent of the total output. “Nigeria produces about 45-50 GW of electricity every day, much more than the grid can produce. But currently only about 5GW reaches the national grid,” he said.

The operator attributed this gap to various structural challenges, stating, “This gap reflects constraints across the value chain, including limited transmission capacity, distribution network constraints and gas supply disruptions.”

To address this crisis, NISO outlined its core mandate, which includes enforcing power grid regulations, improving system delivery, increasing transparency, and strengthening coordination across the sector.

The report also emphasizes the importance of reform, and warns that a functioning and stable electricity grid is critical to the future of Nigeria’s economy. Quoting the chairman of the board of directors, Adesegun Akin-Olugbade, the report added, “After all, electricity is a 19th century technology, and we do not need rocket scientists to solve this problem.”

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As part of its recommendations, the operator called for accelerated network digitalization, infrastructure upgrades, diversification of energy sources, and strict enforcement of network codes.

Highlighting the progress achieved since its founding, NISO demonstrated important improvements in transmission infrastructure, including the installation of 82 new electrical transformers between 2024 and 2025, the addition of more than 8,500MVA of transformer capacity, and the completion of more than 30 transmission projects.

The agency said the national grid’s driving capacity has now increased to around 8,700MW, while its operational achievements include peak generation of 5,802MW recorded in March 2025, record daily energy deliveries of 129,370MWh, and 421 consecutive days without grid disruption between 2022 and 2023.

“This achievement shows the potential of the system when operating conditions are aligned,” he said.

NISO also reported significant progress in digitalizing the power grid through the SCADA/EMS program, disclosing “an investment of $1.16 billion in power grid digitalization,” along with the deployment of more than 3,000 kilometers of fiber optic networks and the installation of SCADA systems at more than 100 substations. This project, he added, has been completed around 69 percent.

The agency stated that improving real-time monitoring will improve operational efficiency and stability of the power grid, and emphasized that bridging the gap between electricity generation and delivery remains a top priority.

Meanwhile, Nigerians continue to experience widespread power outages largely caused by gas supply constraints. The Transmission Company of Nigeria (TCN) attributed the low electricity allocation to factors such as reduced generation output and demand patterns of distribution companies, and noted that allocations were largely based on daily demand from DisCos.

Current power generation levels have fallen significantly below 4,000 MW, further limiting supply nationwide. TCN distribution load profile data as of March 25 2026 shows that only 2,908 megawatts have been allocated to 11 distribution companies in the country.

Distribution companies have repeatedly apologized to customers, citing fuel shortages as the main reason for reduced supplies. The Minister of Power, Adebayo Adelabu, also issued an apology on Tuesday, assuring Nigerians that efforts were being made to restore stability within weeks.

Explaining the situation, the minister said gas shortages affected about 75 percent of gas-fired power plants in Nigeria. “Even the best turbines cannot operate without raw materials. Global gas shortages resulting from the Middle East crisis, local supply obligations, outstanding payments to gas suppliers, and pipeline repairs have all contributed to the recent decline in electricity generation,” he said.

He further revealed that only two of the country’s 32 power plants currently operate under firm gas supply contracts, and the rest rely on irregular, best-effort arrangements.