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The power sector crisis is worsening despite huge investments over the years and the appointment of a new minister of power to oversee the challenges confronting the sector. The latest indictment on the sector comes from the African Development Bank (AfDB), which, in its recent 2026 “African Economic Outlook’ Report, revealed that 70.7 per cent of companies in Nigeria depend on generators for their power needs due to persistent electricity shortage. As a result, businesses in the country are estimated to be spending over 3 per cent of their annual sales on alternative sources of power, especially on fuel and diesel to power their generators. This is the present reality of the power supply situation in the country.
According to statistics, in the past 10 years, the power sector attracted over $50 billion in investments. This included government subsidies and private sector contributions, with some reports citing N36 trillion in subsidies alone. In the AfDB report, the widespread use of generators by companies and households in Nigeria reflects deep infrastructure and governance challenges that have weakened productivity, eroding profitability and undermining confidence, as well as a breakdown in social contract.
Besides, the report noted that many businesses in Nigeria use generators because of unreliable electricity supply across the country. The emergence of electricity distribution companies (Discos) in November 2013 through the privatisation of the Power Holding Company of Nigeria (PHCN) did not improve power supply. Nigeria has a total installed power generation capacity of 16,384MW, but can distribute not more than 4,000MW on most days, or even less. Statistics show that power generation in the country reached its peak in 40 years at 6,003mw daily on March 2, 2025, but has since crashed to less than 3,000mw.
We agree with the AfDB position that stronger delivery of electricity, healthcare, education, water supply, sanitation and public administration services will improve trust in government and strengthen the present tax collection drive. Apart from the AfDB report, the generation companies (Gencos), under the aegis of Power Generation Companies of Nigeria, said that the federal government has not settled a debt of N3.3 trillionn approved by President Bola Tinubu since April. This is in spite official assurances that the implementation of the settlement plan has started. All of this adds to the perennial challenges plaguing the sector. It is high time government stopped playing politics with the power sector and focus squarely on addressing the multifaceted problems facing the sector. It is ironical that while the power sector continues to experience sluggish growth due to inefficiency and cash flow constraints, Benin Republic and Togo get power supply from Nigeria on a 24-hour basis, according to reports from the Transmission Company of Nigeria (TCN).
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The result in high energy cost is deepening the current economic disparities and reducing competitiveness of Nigerian industries in the global market. The government should give more incentives to private power generating companies as alternative to the power supply challenge, since the Discos have not lived up to their mandate. They often complain about inadequate gas supply, aging infrastructure and maintenance challenges as limiting their ability to provide stable power supply. This also highlights the frequent grid collapse due to infrastructure insufficiency.
There is urgent need for upgrade of obsolete equipment with modern power equipment, as well as address the numerous bureaucratic delays in executing transmission upgrades across the country. In addition, government should address policy inconsistencies and limited private sector participation in the sector. This has worsened the sector’s persistent crisis that leads to growth difficulties. Policymakers in the power sector should be reminded that the potential of the power sector in economic development is so significant that urgent steps, anchored on concrete reforms, have become more expedient now than at any other time.
If the federal government must meet its projected economic growth, it must take the AfDB report seriously. Nigeria deserves much more than what it is generating and transmitting currently. It is, indeed, an indictment that over 70 per cent of firms operating in the country depend on generators for their operations. It is also a disheartening that African countries like South Africa, Egypt, Algeria and Morocco, with far smaller population, are generating an average of 35,000 MW, about 700 per cent of what Nigeria is generating. A new road map is urgently needed for the power sector, if the reliance on generators will reduce.
