1.0 Background
The Power and Energy sector remains one of the most critical enablers of sustainable economic development in Africa, in general and Nigeria, in particular. This sector is vital to national economic development: however, it faces significant challenges, including regulatory inconsistencies, liquidity issues, infrastructure bottlenecks, and the transition to a low-carbon energy system. Given its population size, industrial potential, and energy demand, the significance of the case for a reliable, sustainable, and affordable source of energy for Nigeria cannot be overstated. Across the continent, inadequate access to reliable, affordable, and sustainable power supply has slowed industrial growth, widened inequality, and limited social development. For Nigeria, persistent electricity deficits—marked by low generation capacity, transmission bottlenecks, regulatory gaps, and governance challenges—have long undermined national productivity and foreign investment.
Nigeria’s energy mix is predominantly dependent on natural gas feedstock for its electricity generation. In Q1 2025, gas (thermal) accounted for approximately 70% of power generated, while hydropower contributed a smaller share of around 30%. According to the Nigerian Electricity Regulatory Commission (NERC) 4th Quarter 2024 report, Nigeria’s power sector continues to face persistent challenges, including weak generation capacity, high transmission losses, and poor revenue collection, all of which strain liquidity and limit electricity supply. This rather regrettable situation has become part of Nigeria’s power history, as the country holds the title of the world’s largest energy deficit, with 90 million people lacking access to power, surpassing the Democratic Republic of the Congo (70 million) and Ethiopia (58 million). Also, Self-generated electricity in petrol- and diesel-powered generators has been estimated at around 15,000MW by some sources. According to the United Nations
Development Programme, Nigeria continues to lose over N2 billion annually due to unreliable electricity supply. Even more alarming, 28.1% of the electricity generated is lost, placing the country among the top three countries in Africa with the highest rate of energy loss.
Despite being Africa’s most populous economy with estimated 235 million people, Nigeria faces one of the world’s deepest electricity crises. A comparative look at electricity downtime underscores the magnitude of the problem as shown in table 1.
Nigerian households experience over 4,000 hours of blackouts annually (≈175 days), with electricity typically available for just four hours per day. In broader Sub-Saharan Africa, the average manufacturing firm loses about 56 days annually to outages. Country-specific experiences vary significantly.
Table 1: Electricity Downtime – Comparative Snapshot
| Country / Region | Average Outage Frequency | Average Duration per Outage | Annual Downtime Estimate | Notes |
|---|---|---|---|---|
| Nigeria | 6.7 outages/week (~350/year) | 12 hours | ~4,200 hours (~175 days) | Severe household impact; feeders show ~160 blackout days/year |
| Ghana | Intermittent (“dumsor”); ~5–10 outages/month in affected areas | 2–4 hours | 12–48 hours (urban), higher in rural areas | Reliability improved but uneven |
| Rwanda | Rare in Kigali; occasional rural outages | 1–2 hours | <30 hours/year | Strong grid investments; mini-grids supplement |
| Africa (avg.) | Varies widely | — | ~56 days/year | Average for Sub-Saharan manufacturing firms |
| USA | ~1.1 interruptions/year | ~1–2 hours | ~1.2–2 hours/year | Excludes major events |
| UK | <1 interruption/year | <30 min | ~0.3 hours/year | Very high reliability |
| France | <1 interruption/year | ~15–25 min | ~0.2–0.4 hours/year | Excellent reliability |
| Canada | ~1–2 interruptions/year | 1–2 hours | ~2–4 hours/year | Higher in remote areas |
| Japan | <1 interruption/year | <1 hour | ~1 hour/year | Dense grid resilience |
| UAE | Rare | <30 min | <1 hour/year | Strong redundancy |
| China | ~0.2 interruptions/year | <1 hour | <1 hour/year | Reliability improving rapidly |
| Singapore | ~0.1 interruptions/year | <1 hour | ~0.1 hours/year | Among the most reliable globally |
Source: World Population Review Newsletter wpr-newsletter@mail.beehiiv.com August 27, 2025
This disparity hundreds of blackout days in Nigeria versus only hours in advanced economies – highlights the urgency of reform in governance, ethics, and investment for the African power sector. The apparent failure of the current electricity landscape in the country highlights the need for the development of optimized energy solutions that enable a varied, cost-effective energy mix geared towards the most economical and environmentally friendly value addition.
As a country endowed with vast natural resources, Nigeria has the potentials to close the yawning electricity production, and distribution by incentivizing investors in both natural gas and renewable(solar) energy production and supply segments of the economy. The present administration of President Bola Ahmed Tinubu, GCFR, has taken a two-pronged approach to incentives in both sectors to drive investments in natural gas and solar PV productions and installations
Globally, renewable energy has gained prominence, with solar energy emerging as the most scalable, cost-efficient, and adaptable option for developing economies. Unlike nuclear energy, which requires substantial capital investment, extensive safety infrastructure, and lengthy lead times, solar energy can offer a more practical pathway for Nigeria to close its energy gap. The abundance of sunshine in Nigeria and across the African continent makes it a no-brainer to leverage this resource and empower the continent to exit its so-called ‘dark continent’ status and shine in the marvellous light. Advances in battery storage, mini-grid technologies, and falling solar panel costs make solar solutions particularly well-suited for rural electrification and SME empowerment. Despite the initial cost outlay of individualized solar systems, they yield a significant return on investment. Furthermore, a strategic communal approach to solar energy solutions significantly reduce or even eliminates the initial high cost, providing even greater ROI. In contrast, nuclear energy, while powerful, poses governance risks in terms of safety, waste management, and long-term political commitment risks that Nigeria’s current institutional framework may not be adequately prepared or positioned to manage.
As a case in point, Nigeria’s journey towards nuclear technology began as far back as 1973, when the nation invested in centres for nuclear energy development established in three federal universities, including the then University of Ife (now Obafemi Awolowo University) and Ahmadu Bello University. Subsequent investment/contract executions by the Buhari-led federal government in the 2000s highlight the stop-and-start tendency of leadership in the country, as well as the absence of continuity and sustainability.
2.0 Objective of the Position Paper
The bane of power and energy development in Nigeria has often been ethical leadership gaps and weak commitment to implementation. Reforms have been announced, but they have been inconsistently executed, with vested interests often undermining progress. The assignment of the PESG presents a unique opportunity to strengthen corporate governance, ethical practices, and policy advocacy within the sector, focusing on optimized energy solutions that enable a varied and cost-effective energy mix, delivering the best economic and environmental value. This presents an opportunity to realistically look at the power and energy bouquet with focus on Nigeria’s thermal power and renewable (solar) energy pathways at a strategic level to transform Nigeria’s economy and society.
3.0 Financial Impacts of unreliable energy supply.
Table 2 shows the financial impact of unreliable energy supply
| Country / Region | Financial Impact | Estimated Annual Cost / Loss | Notes |
|---|---|---|---|
| Nigeria (National Economy) | Economic losses due to unreliable supply |
~US$29 billion annually (Reuters) (~6.1% of 2022 GDP; 15.4% of 2024 GDP – World Bank) |
Grid failures, aging infrastructure, vandalism |
| Nigeria (Self-generation Cost) | Extra cost for diesel use vs grid |
US$14 billion annually (Energy Wize) US$22 billion annually (Standard Bank) |
Businesses pay 3–5× more than reliable-grid prices |
| Nigerian Industries | Direct and indirect industrial costs |
~₦2.56 trillion (~2.26% of GDP in 2014) (ResearchGate) |
Huge GDP and budget impact due to reduced ROI and reliance on generators |
| Sub-Saharan Firms (Average) | Sales lost due to outages |
~5% of annual sales lost, up to 31% in worst cases (Energy News Africa Plus) |
Many firms experience double-digit sales losses; GDP shrinkage ~2.1% |
| Ghana | Business sector losses due to “dumsor” | ~US$1 billion in 2014 (Wikipedia) | Company disruption, spoilage, health costs, inequality |
| South Africa | National GDP hit from load shedding |
1–1.3% GDP reduction; US$85–230 million/day losses (Wikipedia) |
Up to 20% reduction in economic potential; R4 bn/day loss during extreme shedding |
| Country / Region | Financial Impact & Context | Cost Estimate |
|---|---|---|
| U.S. Businesses | Outage cost to medium and high-impact business operations | US$1.6–1.9 million per hour of downtime (New Relic) |
| United States (Aggregate) | Business-sector losses across key segments | >US$27 billion annually (Esource) |
3.1 Analysis and Implications
- Africa’s energy insecurity imposes steep economic burdens:
- Nigeria alone loses roughly US$29 billion annually, equating to around 6% of its 2022 GDP and 4% of 2024 GDP figures. Businesses resort to selfgeneration, costing an additional US$14 billion/year. Standard Bank Report puts the cost of fuel arising from self-generation at US$22 billion annually.
- Industrial sectors face both direct and indirect costs—amounting to 2% of GDP in past analyses.
- Many businesses across Sub-Saharan Africa report 5% or more in lost sales, with some experiencing up to 31% revenue drop due to power outages.
- Ghana’s power crises (“dumsor”) cost US$1 billion in a single year, while South Africa’s sustained load shedding has curtailed its economic growth by 1–
1.3% annually, with daily losses up to US$230 million.
- In developed economies, despite being comparatively rare, outages still carry high costs:
- Large-scale business outages in the U.S. average US$1.6–1.9 million per hour for medium to high-impact disruptions.
- Across industries, the U.S. sees over US$27 billion in annual losses due to power disruptions.
- Contrast in scale and frequency:
- African firms operate under constant instability—incurring recurring operational and capital shocks.
- Developed countries, though generally reliable, still face high short-term costs during rare significant outages.
- The cost per hour of outage in the U.S. can eclipse total annual losses for many African countries, underscoring both the scale of the issue and the resilience of more developed systems.
The PESG’s assignment is therefore critical for highlighting and positioning policy towards ethical leadership, which would change the narrative.
4.0 Review of the current state of Nigerian power and energy sector
According to Umunna (2025), while successive reforms most notably the 2005 Electric Power Sector Reform Act and the 2023 Electricity Act—sought to restructure the sector, persistent governance failures, including political interference, weak regulation, financial inefficiencies, and corruption, have undermined progress.
Despite the 2023 Electricity Act that devolved electricity regulatory and generation power to the States, the Nigerian Electricity Regulatory Commission (“NERC”) 2025 Q1 Report (FBNQuest, 2025; NERC, 2025; Tope Adebayo LP, 2025) presented a total of 28 grid connected power plants with combined installed generation capacity of 13,625MW, with an average available capacity of a mere 5,296.89 MW
and a plant availability factor of 38.88%. Plant availability factor, PAF, measures the ratio of available capacity to installed capacity. The PAF increased to some 41% as of May 2025, as the sector registered average available generation capacity of 5,639 MW (Tope Adebayo LP, 2025); the nation therefore relies heavily on expensive and polluting generators as backup (Umunna, 2025). The challenge is less technical than institutional: governance failures remain the structural root of dysfunction in the power sector. Effective governance must therefore be seen not merely as a compliance requirement but as the defining identity for both regulators and boards. This means embedding accountability, transparency, and sustainability at the core of sector institutions. Globally, access to capital and credibility increasingly depend on adherence to ESG standards such as IFRS S1/S2, GRI, and IFC Performance Standards.
Nigerian power companies must align with these frameworks to attract investment, safeguard public trust, and meet climate commitments (Umunna, 2025). The author opines that to achieve the above, practical governance protocols are essential. These include tariff transparency mechanisms, anti-corruption procurement clauses, remediation funds for environmental and social impacts, and grievance redress systems for communities. Boards must oversee these through dedicated governance committees, ESG dashboards, and annual sustainability reports. Implementing these measures with discipline and accountability can transform governance from structural weakness into a strategic driver of resilience, enabling Nigeria’s power sector to deliver reliable, affordable, and sustainable electricity to its citizens and economy.
In terms of revenue collection, the Nigerian power and energy sector recorded a collection efficiency of 71.07% in March 2025, based on a total received energy of 2,886.72 GWh, and billing of 2,318.12 GWh billed, which translates to Nigerian Naira (NGN) 265.77 billion, of which only NGN188.89 billion was collected. This is in addition to the existing debt of about NGN4.7 trillion owed to the sector by the Federal Government, in respect of which the government promised to offset some NGN2 trillion within the 3rd quarter of 2025. This massive debt is one of the significant challenges crippling the power sector, alongside the perennial vandalism of electricity infrastructure. As the Transmission Company of Nigeria (TCN) reported, more than 178 transmission towers were vandalized in the first half of 2025 alone. The sector is also battling metering problems including huge, estimated billings and meter theft.
Finally, there are also serious corporate governance challenges, as was publicly acknowledged by the Minister of Power, Adebayo Adelabu, during the corporate governance forum in Abuja, on April 7, 2025, where a performance scorecard for State Owned Enterprises (SOEs) was launched. According to him, poor governance and performance management practices have eroded value across government-owned entities in the power sector value chain. He reiterated the need for good governance, which he said will not only ensure operational excellence but also boost investor confidence, facilitate regulatory compliance, and protect public interests.
Thus, in relation to the power and energy sector in Africa, particularly Nigeria, the following key issues are notable;
- Governance, not infrastructure, is the core challenge in the power sector; weak regulation, political interference, and corruption undermine reforms and service delivery.
- There is a significant need for boards and regulators to embrace governance as identity, embedding accountability, transparency, and sustainability in decisionmaking rather than treating it as a compliance factor.
- Global ESG standards, including the IFRS, GRI, IFC, and Equator Principles, are now prerequisites for investment and financing; Nigerian power and energy institutions must align with these to attract capital and legitimacy.
- Practical governance protocols—including tariff transparency, anti-corruption clauses, remediation funds, and grievance mechanisms—provide actionable tools for boards in the sector to rebuild trust and resilience.
- The Federal Government’s recent move towards leveraging on the opportunities offered by renewable energy, especially solar energy, while maintaining historical sources like gas and hydro, creates the opportunity for advocacy as to best practices to be adopted in the inclusion of this economical and environmentally friendly option with its value-adding potential.
The adoption of this framework will lead to resilient institutions, attract sustainable investment, and restore public trust in Nigeria’s electricity industry.
5.0 Some Identified Governance and Ethics Issues Affecting the Sector
Policy Inconsistency and Weak Enforcement – Frequent policy reversals and lack of commitment undermine investor confidence and long-term planning.
- Corruption and Ethical Deficits – Rent-seeking behavior and lack of transparency in contract awards and regulatory approvals erode trust and efficiency.
- Stakeholder Exclusion in Decision-Making – Communities, SMEs, and professional bodies are often excluded from policy formulation and project implementation, weakening inclusivity.
5.1 Suggested Policy Recommendations
- Stable Renewable Energy Policy Framework: Advocate for a 10–15-year consistent renewable energy roadmap with embedded accountability measures.
- Incentivized Financing for Solar SMEs and Households: Recommend tax breaks, concessional loans, and public–private partnerships that enable small-scale solar deployment.
- Ethics and Governance Codes for Power and Energy Operators: Develop sectorspecific guidelines (through CIoD Academy) to entrench accountability, inclusivity, and sustainability.
- Strengthened Implementation Monitoring: Establish independent monitoring mechanisms that ensure energy policies are not just announced but executed.
6.0 Conclusion
The Power and Energy Sectoral Group (PESG) has a unique opportunity to lead a governance focused reform agenda in Nigeria’s power energy sector, presenting an optimized and balanced energy mix that allows for a cost-effective energy mix that is geared towards the most economical and environmentally friendly value addition, highlighting solar energy as a viable and transformative option. The Federal Government’s present focus on this provides an opportunity to expand energy sources for the Nigerian populace, thereby reducing economic losses, improving the environment, promoting governance, and offering other benefits.
Through structured advocacy, stakeholder engagement, and a strong emphasis on ethical leadership, PESG can help reposition Nigeria toward a sustainable energy future. This draft provides a foundation for review and determination of the PESG’s initial position paper for submission to the Advocacy and Stakeholder Engagement Committee of the CIoD, Nigeria.
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