Nigeria’s Power Crisis Deepens As Grid Inefficiency Costs ₦2.38 Trillion & Discos Lose ₦140.6 Billion
Nigeria’s Power Sector Faces Mounting Financial and Operational Challenges
NIGERIA’S electricity industry is facing renewed scrutiny following revelations that persistent grid inefficiencies have cost the country more than ₦2.376 trillion over the past 12 years, while electricity distribution companies (Discos) recorded an additional ₦140.64 billion in losses during the first quarter of 2026 alone.
The concerns emerged as industry stakeholders gathered at the 11th Nigeria Energy Forum (NEF 2026) in Lagos, where experts called for comprehensive reforms to improve operational efficiency, expand industrialisation and unlock the country’s energy potential.
₦2.376 Trillion Lost Through Underutilised Power Capacity
Speaking at the conference, Managing Director and Chief Executive Officer of the Nigerian Independent System Operator (NISO), Engr. Abdu Bello, disclosed that Nigeria has consistently failed to maximise its installed electricity generation capacity.
Represented by NISO’s General Manager for Research, Engr. Deji Ojo, Bello explained that although Nigeria currently has an available generation capacity of 7,311 megawatts (MW), only about 4,222MW is effectively dispatched into the national grid.
According to him, more than 3,100MW remains stranded, representing electricity that could have generated economic value but instead contributes to mounting capacity payment losses.
He estimated that cumulative losses arising from this underutilisation have exceeded ₦2.376 trillion since 2015.
Bello described the creation of NISO as a significant institutional reform aimed at shifting the electricity sector’s focus from merely expanding infrastructure to improving operational efficiency, market reliability and industrial competitiveness.
Electricity Generation Declines in First Quarter
Fresh data released by the Nigerian Electricity Regulatory Commission (NERC) paints an equally troubling picture.
According to the regulator, electricity generation declined by 9.64 per cent during the first quarter of 2026.
Average available generation capacity dropped from 5,400.38MW in the last quarter of 2025 to 4,457.96MW, while average hourly generation fell to 4,112.72 megawatt-hours.
Overall electricity production also declined to 8,883.47 gigawatt-hours, representing a reduction of nearly 950GWh compared with the previous quarter.
NERC attributed the decline largely to reduced available capacity across 20 of Nigeria’s 28 grid-connected power plants.
Distribution Companies Record Heavy Revenue Losses
The report also highlighted worsening commercial performance among electricity distribution companies.
Although Discos received 7,148.47GWh of electricity during the quarter, only 5,967.22GWh was successfully billed to customers.
Out of electricity worth ₦955.19 billion, customers were billed ₦756.93 billion, while only ₦597.56 billion was eventually recovered.
This left billing losses of approximately ₦198.25 billion.
The regulator further revealed that Aggregate Technical, Commercial and Collection (ATC&C) losses reached 37.44 per cent, far exceeding the regulatory target of 16.92 per cent.
Those inefficiencies translated into estimated revenue losses of ₦140.64 billion during the quarter.
Kaduna Electric recorded the weakest performance, posting losses of 69.66 per cent, almost four times its approved regulatory target.
Industry Leaders Call for Industrialisation Through Reliable Energy
Participants at NEF 2026 argued that improving electricity reliability remains fundamental to Nigeria’s industrial transformation.
Group Managing Director of Odu’a Investment Company Limited, Abdulrahman Yinusa, described stable electricity as the foundation of industrial growth.
He observed that although Nigeria possesses abundant natural resources, greater emphasis must be placed on processing them locally rather than exporting raw materials.
Similarly, the Nigerian Content Development and Monitoring Board (NCDMB) stressed the need to prioritise local manufacturing, domestic resource utilisation and indigenous human capacity.
Innovation, Clean Energy and Technology Highlighted as Solutions
Stakeholders also advocated increased investment in renewable energy, technology and innovation.
Representatives of All On highlighted how university-based innovation competitions have supported young entrepreneurs in developing commercially viable clean-energy solutions.
The Rural Electrification Agency (REA) emphasised expanding electricity access to stimulate businesses and economic growth, while the National Agency for Science and Engineering Infrastructure (NASENI) outlined efforts to build locally driven manufacturing ecosystems.
Technology experts also pointed to artificial intelligence, digital infrastructure and research-driven innovation as critical tools for improving energy exploration, efficiency and sustainability.
Experts Say Operational Efficiency Will Determine Sector Growth
Industry leaders agreed that Nigeria’s electricity challenges extend beyond inadequate generation capacity.
They argued that improving grid management, reducing technical and commercial losses, strengthening distribution networks and implementing market reforms remain essential for translating existing capacity into economic development.
As policymakers pursue energy-sector reforms, experts maintain that sustainable industrialisation will depend largely on creating a power system capable of delivering reliable electricity to households, businesses and manufacturers.
