While Nigeria’s electricity crisis has become all too familiar, the latest evidence about its debilitating impact should end any lingering illusion that this situation is nothing short of a full-scale economic emergency.
In just the first quarter of 2026, 24 companies listed on the Nigerian Stock Exchange spent a staggering N400.83 billion on diesel, gas and other alternative energy sources to keep their businesses running.
That represents a 3.66 per cent increase over the same period in 2025, while companies that separately disclosed electricity expenses reported an even more shocking 81.5 per cent increase in power costs following higher tariffs and worsening supply constraints.
These figures, compiled from companies’ unaudited financial statements by The PUNCH, illustrate the enormous premium Nigerian businesses continue to pay for a public utility that ought to be available, reliable and affordable.
According to the World Bank, unreliable electricity costs Nigeria about $29 billion annually, equivalent to roughly 5-7 per cent of GDP, making poor power supply one of the country’s biggest constraints to economic growth.
The African Development Bank estimates that more than 70 per cent of Nigerian firms own or share generators, among the highest rates anywhere in the world.
Instead of depending on a functioning national grid, businesses have been forced to construct what experts now describe as a vast “shadow grid” comprising between 14 and 20 gigawatts of self-generated capacity, powered mainly by diesel and petrol generators.
According to estimates, operating this parallel electricity system reportedly consumes between $20 billion and $22 billion every year in fuel alone. This is economic absurdity.
The corporate figures suggest that Dangote Cement alone spent 184.87 billion on energy during the first quarter. BUA Cement followed with N67.34 billion, Eterna with N60.77 billion, while banks such as United Bank for Africa, Zenith Bank and First HoldCo collectively spent tens of billions of naira keeping their branches operational through self-generation.
Every naira burnt in generators is capital diverted from expanding factories, hiring workers, investing in technology or lowering prices for consumers.
As Akpan Ekpo, economist and public policy expert at the University of Uyo, rightly observed, no serious economy runs on generators. Companies inevitably transfer these mounting energy costs to consumers, fuelling inflation and making Nigerian products increasingly uncompetitive.
For manufacturers, energy now accounts for as much as 30 to 35 per cent of production costs, compared with less than half that level in countries with stable electricity systems.
Frequent outages damage expensive industrial equipment, disrupt production schedules and reduce capacity utilisation.
Small and medium-sized enterprises, lacking the financial muscle to invest in sophisticated backup systems, suffer even more devastating consequences. Many simply shut down.
It is hardly surprising that several multinational manufacturers have either downsized or exited Nigeria in recent years, citing the high cost of doing business. Reliable electricity remains one of the first indicators foreign investors examine before committing capital.
Persistent grid collapses, chronic transmission bottlenecks and widespread dependence on diesel generators send the wrong message.
The tragedy is that Nigeria’s electricity crisis is neither new nor inevitable.
For decades, successive governments have promised reforms without delivering sustained improvements.
The much-touted 2013 power sector privatisation was expected to unleash private capital, improve efficiency and expand generation.
Instead, the sector has largely remained trapped in a cycle of inadequate investment, weak governance, mounting debts, poor commercial performance and regulatory uncertainty.
Generation has stagnated far below national demand; just 5,000 MW for a population of 230 million. Transmission infrastructure remains obsolete and overloaded. Distribution companies continue to struggle with technical losses, poor metering and revenue collection.
The entire electricity value chain suffers from liquidity shortages that discourage new investment while leaving consumers to pay more for less.
The irony is both profound and painful. Nigeria possesses abundant natural gas reserves, one of Africa’s highest solar irradiation levels and enormous hydroelectric potential. Yet businesses continue to spend fortunes powering generators.
The Managing Director of the Rural Electrification Agency, Abba Aliyu, recently captured the broader implications. When manufacturers depend on diesel, he noted, profit margins shrink, competitiveness declines, emissions increase and expansion becomes more difficult.
When agro-processors lack reliable electricity, food is wasted, and rural incomes suffer. When digital infrastructure remains power-constrained, Nigeria loses opportunities in the knowledge economy.
Similarly, Lagos Chamber of Commerce and Industry President Leye Kupoluyi correctly described energy as the foundation of every modern economy and urged accelerated investment in renewable energy.
The Centre for the Promotion of Private Enterprise, led by Muda Yusuf, has also advocated comprehensive structural reforms encompassing stronger governance, improved transmission infrastructure, decentralised renewable energy, better sector financing and a credible pathway to cost-reflective tariffs supported by targeted social protection.
Regardless, there are encouraging signs. The constitutional amendment allowing states to legislate on electricity, the enactment of the Electricity Act 2023, ongoing state electricity market reforms and growing interest in embedded generation, mini-grids and renewable energy are opening new opportunities for private investment. These initiatives deserve strong support.
However, private investment alone cannot rescue the sector.
Electricity remains a strategic national infrastructure. No country has achieved rapid industrialisation by leaving critical power infrastructure entirely to market forces.
The government must provide the leadership, policy certainty, financing support and institutional discipline necessary to rebuild the transmission network, modernise the national grid, strengthen regulation and restore investor confidence.
Nigeria cannot continue financing one of the world’s largest generator economies while pretending it has an electricity sector.
The option is that Nigeria can continue subsidising failure through an expensive shadow grid, or it can finally invest in the modern electricity system that genuine industrialisation, technological advancement, and improved living standards demand.
