Nigeria’s €2.3 Billion Siemens Power Plan Stalls As Electricity Output Remains Low

Ambitious Electricity Project Falls Short

NIGERIA’S ambitious €2.3 billion Presidential Power Initiative (PPI)—designed to dramatically boost electricity supply across the country—has failed to meet its core objectives, leaving the country’s power output far below projected levels.

The flagship project, spearheaded by the Federal Government through FGN Power and implemented by German engineering giant Siemens, aimed to increase electricity generation to 25,000 megawatts (MW) between 2020 and 2025.

However, industry data shows that the country’s electricity output still struggles to reach 7,000MW, raising concerns among stakeholders about the effectiveness of the initiative and the broader challenges facing Nigeria’s power sector.

Targets Set but Not Achieved

The Presidential Power Initiative was structured as a phased programme to overhaul Nigeria’s electricity value chain—from generation to transmission and distribution.

Under the roadmap, the government projected:

• 7,000MW by 2021

• 11,000MW by 2023

• 25,000MW by 2025

Yet, according to figures from the Nigerian Independent System Operator (NISO), the country continues to grapple with limited electricity supply.

Current estimates indicate that Nigeria generates around 5,000MW, transmits just over 4,000MW, and distributes roughly 3,000MW to a population exceeding 200 million people.

These figures highlight the persistent gap between installed generation capacity—often estimated at over 12,000MW—and the electricity actually delivered to homes and businesses.

Structural Weaknesses Undermine the Project

Energy industry operators attribute the project’s shortcomings to longstanding structural challenges within Nigeria’s power sector.

These include:

• Aging and inadequate infrastructure

• Weak transmission networks

• High technical and commercial losses

• Limited metering coverage

• Liquidity challenges across the electricity market

Experts say that even where power plants have capacity on paper, electricity often cannot be delivered due to gas shortages, grid instability, and weak distribution networks.

These bottlenecks continue to restrict the amount of electricity that reaches consumers.

Government Defends Project Implementation

Despite the missed targets, FGN Power maintains that the initiative has not completely stalled and that key components are still being implemented.

According to the agency, the process of securing financing arrangements required extensive negotiations and due diligence, which prolonged the early stages of the project.

“Although the process required extensive negotiations, it was deliberately undertaken with the necessary rigour to ensure the financing arrangements deliver optimal value for Nigeria,” the agency said.

Under the ongoing Phase 1 projects, several transmission substations are still under construction.

Three substations—Abeokuta, Ayede and Onitsha—are expected to be completed by 2026, while two others in Sokoto and Offa are scheduled for completion by 2027.

When completed, the five substations are expected to increase transmission wheeling capacity by 984MW.

Meanwhile, contracts for 12 additional substations under Phase 1 Batch 2 are expected to be signed in May 2026, with completion targeted for 2028.

Distribution Remains the Weakest Link

Energy law expert Yemi Oke, a professor at the University of Lagos, said the distribution segment remains the weakest part of Nigeria’s electricity value chain.

According to him, electricity distribution companies continue to face multiple operational challenges, including metering gaps, energy theft, tariff collection issues and huge commercial losses.

“The distribution segment absorbs the shocks of the entire system,” he said. “When there is electricity, people credit the distribution companies; when there is none, they are blamed.”

He added that the transmission network also suffers from serious infrastructure weaknesses, frequent grid collapses and vandalism of high-voltage lines.

Nigeria’s transmission capacity, he noted, has struggled to exceed 5,000MW, and attempts to increase load often lead to system instability.

Economic Costs of Power Failure

Business leaders say the failure to meet the PPI targets has had significant consequences for the Nigerian economy.

Chinyere Almona, Director-General of the Lagos Chamber of Commerce and Industry, said unreliable electricity continues to impose heavy costs on businesses.

Many firms rely on diesel and petrol generators to maintain operations, significantly raising production costs and reducing competitiveness.

Small and medium-sized enterprises are particularly affected, as unstable electricity supply limits productivity and expansion.

“Reliable electricity remains a prerequisite for industrialisation, job creation and economic diversification,” Almona said.

She also noted that power instability discourages foreign direct investment, as investors typically prefer countries with stable and affordable energy supplies.

Concerns Over Economic Growth

The Centre for the Promotion of Private Enterprise (CPPE) also warned that Nigeria’s economic growth and job creation will remain constrained without major improvements in electricity supply.

The organisation said industrial productivity is closely linked to reliable power and warned that heavy reliance on expensive alternative energy sources weakens competitiveness.

“International trade is fundamentally about competitiveness,” the group said, noting that Nigeria risks struggling to benefit from the African Continental Free Trade Area without significant improvements in power supply.