Nigeria’s persistent electricity shortages are costing the economy as much as N10 trillion annually, amplifying inflationary pressures and undermining business performance, according to the Centre for the Promotion of Private Enterprise (CPPE).
The estimate, contained in a statement issued on Tuesday, comes as the federal government seeks to contain a fresh wave of outages that have disrupted homes, businesses and industries, with the Minister of Power, Adebayo Adelabu, issuing a public apology and promising near-term improvements in supply.
In the statement, CPPE Chief Executive Officer, Dr Muda Yusuf, said unreliable electricity has imposed a structural cost burden on the economy, forcing widespread reliance on petrol and diesel generators. Annual spending on self-generation exceeds N3.7 trillion, underscoring the scale of the country’s energy gap.
The combined impact of elevated energy costs and lost productivity translates into economic losses of between N7 trillion and N10 trillion each year, Yusuf said, warning that the dependence on alternative energy sources is feeding directly into inflation.
“This structural dependence on expensive alternative energy sources has created a strong transmission channel from global oil price shocks to domestic inflation,” he said.
The effect has intensified amid rising global crude oil prices linked to geopolitical tensions involving Iran, Israel and the United States. Higher oil prices have driven up domestic fuel costs, increasing transportation and production expenses across sectors.
Although headline inflation eased slightly to 15.06 per cent in February from 15.10 per cent in January, Yusuf said price pressures remain elevated. Disinflation, he noted, reflects a slower rate of increase rather than any meaningful decline in the cost of living.
Households continue to face rising costs for food, transport and energy, while businesses, particularly small and medium-sized enterprises, are grappling with shrinking margins and weak demand. High operating costs have constrained output and reduced competitiveness, with energy emerging as a dominant expense.
The strain has been compounded by recent disruptions to electricity supply. Speaking at a press conference in Abuja on Tuesday, Adelabu acknowledged the scale of the outages and their impact.
“I want to apologise to Nigerians… for this temporary issue that is leading to hardship being experienced, especially during this dry season,” he said, citing the effects on homes, schools and industries as temperatures rise.
The outages are largely linked to constraints in gas supply to power plants, pipeline maintenance challenges and persistent liquidity issues in the sector. Nigeria’s electricity generation is heavily dependent on gas-fired plants, making supply vulnerable to disruptions.
Adelabu said the government has constituted a committee to monitor compliance with domestic gas supply obligations, a longstanding constraint in the power value chain. Commitments from gas producers, alongside repairs to key pipelines, are expected to improve supply in the near term.
“With the timeline for repair of the gas pipelines, two weeks from now, we should start seeing improvements in supply,” he said.
He also pointed to ongoing maintenance at facilities operated by Seplat Energy as critical to restoring gas flows to power plants. Efforts to improve payment flows to gas suppliers are underway to sustain supply.
Despite the setbacks, Adelabu maintained that the disruptions are temporary and do not alter the government’s broader plans. He reiterated a target to raise electricity generation to 6,000 megawatts by the end of 2026, alongside improvements in transmission and distribution.
For businesses, the immediate challenge remains cost. Heavy reliance on self-generation continues to erode profitability, particularly in manufacturing and services where energy is a major input. Many firms allocate a significant share of expenses to fuel, limiting expansion.
Yusuf said resolving the electricity deficit is central to easing inflation and supporting growth. Reliable grid supply would lower production and logistics costs, improve efficiency and moderate price pressures.
He called for accelerated investment across the power value chain, alongside support for decentralised and renewable energy solutions, including tax incentives for solar equipment.
Nigeria’s power sector continues to face structural constraints, including ageing infrastructure, transmission bottlenecks and funding gaps, limiting consistent improvements in supply.
“The economy remains highly vulnerable to energy shocks,” Yusuf said. “Without decisive action on power supply, inflationary pressures will persist.”