Nigeria bleeds N40tn annually to power outages, system operator warns

Nigeria is losing an estimated N40tn every year due to erratic electricity supply, the Nigerian Independent System Operator (NISO) has revealed, underscoring the severe impact of unreliable power on economic growth, industrial output, and employment.

In its latest industry report, the Federal Government agency identified chronic blackouts as a major drag on productivity, noting that businesses and households are forced to shoulder enormous costs by generating their own electricity.

According to the operator, the financial toll of unreliable power supply is put at about $29bn annually, which translates to roughly N40.1tn 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 $29bn annually. Businesses, manufacturers, and households spend billions each year generating their own electricity,” the system operator said in its latest industry report.

The report stressed that ensuring a steady power supply could significantly boost the economy, adding that “a stable national grid unlocks economic growth, industrial productivity, and job creation”.

Despite Nigeria’s vast generation potential, NISO pointed out that only a fraction of produced electricity actually reaches consumers due to systemic inefficiencies across the power value chain.

It disclosed that while the country generates between 45,000 and 50,000 megawatts daily, the national grid is only able to transmit about 5,000 megawatts—just 10 per cent of total output. “Nigeria generates approximately 45-50 GW of electricity daily, far more electricity than the grid can deliver. Yet only about 5GW currently reaches the national grid,” it said.

The operator attributed this gap to a range of structural challenges, stating, “The gap reflects constraints across the value chain, including transmission capacity limitations, distribution network constraints, and gas supply disruption.”

To tackle the crisis, NISO outlined its core mandate, which includes enforcing grid regulations, improving system dispatch, enhancing transparency, and strengthening coordination across the sector.

It also emphasised the urgency of reforms, warning that a functional and stable grid is critical to Nigeria’s economic future. Quoting its board chairman, Adesegun Akin-Olugbade, the report added, “Electricity is, after all, a 19th-century technology, and we do not need rocket scientists to fix these problems.”

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

Highlighting progress made since its establishment, NISO pointed to key improvements in transmission infrastructure, including the installation of 82 new power transformers between 2024 and 2025, the addition of over 8,500MVA in transformer capacity, and the completion of more than 30 transmission projects.

The agency said the national grid’s wheeling capacity has now risen to about 8,700MW, while operational milestones include a peak generation of 5,802MW recorded in March 2025, a daily energy delivery record of 129,370MWh, and 421 consecutive days without a grid collapse between 2022 and 2023.

“These milestones demonstrate the potential of the system when operating conditions align,” it said.

NISO also reported significant strides in digitalising the grid through the SCADA/EMS programme, disclosing a “$1.16bn investment in grid digitalisation,” alongside the deployment of over 3,000 kilometres of fibre optic network and the installation of SCADA systems in more than 100 substations. The project, it added, is about 69 per cent complete.

The agency maintained that enhanced real-time monitoring would improve operational efficiency and grid stability, stressing that bridging the gap between electricity generation and delivery remains a top priority.

Meanwhile, Nigerians continue to endure widespread blackouts largely blamed on gas supply challenges. The Transmission Company of Nigeria (TCN) attributed low electricity allocation to factors such as reduced generation output and distribution companies’ demand patterns, noting that allocations are largely based on daily requests from DisCos.

Current generation levels have dropped significantly below 4,000MW, further constraining supply nationwide. Data from TCN’s distribution load profile as of March 25, 2026, showed that only 2,908 megawatts was allocated to the country’s 11 distribution companies.

Distribution firms have repeatedly apologised to customers, citing gas constraints as the main reason for reduced supply. The Minister of Power, Adebayo Adelabu, also issued an apology on Tuesday, assuring Nigerians that efforts are underway to restore stability within weeks.

Explaining the situation, the minister said gas shortages are affecting about 75 per cent of Nigeria’s gas-fired plants. “Even the best turbines cannot operate without raw materials. Global gas shortages due to the Middle East crisis, local supply obligations, outstanding payments to gas suppliers, and pipeline repairs have all contributed to the recent decline in generation,” he said.

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

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