26 Years On: Why Nigeria Still Struggles to Generate Beyond 5,000 MW

26 years after the turn of the century, Nigeria’s power sector offers a frustrating paradox: an installed capacity that promises modern electricity for a nation of over 200 million, and an actual grid output that stubbornly hovers around 4,500–5,500 megawatts. That tiny net gain over more than two decades, roughly a 500 MW increase since 1999, helps explain why homes and businesses still run on noisy diesel generators, why factories run below capacity, and why millions of productive hours are lost every year.

To understand the persistence of low grid output despite periods of reform and large capital injections, we must look at three linked failures: physical infrastructure, fiscal and market design weaknesses, and governance/operational breakdowns. Physically, transmission lines and substations built decades ago are brittle and overloaded. Frequent collapses of the national grid and chronic technical losses mean that even when plants are available, the system cannot reliably move power from north to south or into densely populated urban centres. The consequences are cascading outages and very low average plant utilisation.

Fiscal and market dynamics make the technical problems worse. Nigeria’s tariff regime and subsidy arrangements historically kept consumer prices below the true cost of supply, creating enormous revenue shortfalls across the value chain. Distribution companies accumulate receivables, and the government has carried massive implicit liabilities, debts owed to generation companies and gas suppliers, making investment unattractive. Recent reforms, including targeted tariff adjustments and subsidy reductions, have started to ease fiscal pressure, but the accumulated debt and liquidity constraints still choke operations and maintenance across the sector.

Operationally, the sector is hostage to fuel insecurity and vandalism. Much of Nigeria’s thermal generation depends on natural gas, yet gas flows are unreliable because of pipeline vandalism, commercial disputes, and inadequate gas-gathering infrastructure. When gas is unavailable, expensive thermal plants sit idle; when they run, they often do so at partial load because of upstream interruptions. Add to that the human factor, poor maintenance, weak performance incentives, and uneven regulatory enforcement, and the result is a system that under-delivers even when the physical capacity exists on paper.

The economic implications are large and measurable. Chronic power shortfalls shave points off GDP growth, deter manufacturing investment, raise the cost of doing business, and depress formal employment in energy-intensive industries. Independent estimates of the annual economic cost of outages run into the tens of billions of dollars, losses that amplify poverty and reduce competitiveness. In short, weak electricity supply is not merely an inconvenience: it is a structural brake on Nigeria’s growth ambitions.

So what needs to change? First, prioritize grid resilience and targeted transmission upgrades. Strategic investments in strengthening high-voltage lines, modernizing substations, and deploying smart grid technologies would reduce collapses and technical losses. Second, secure fuel supply: protect and expand gas infrastructure, incentivize upstream investments in gas processing, and accelerate on-site fuel solutions where appropriate. Third, finish the market architecture, and ensure cost-reflective tariffs with social protection for the vulnerable. Fourth, decentralize where it helps: mini-grids and commercial-scale renewables can bypass weak transmission corridors and deliver power to industrial clusters and rural communities faster than waiting for a perfect national grid.

Governance must be the thread that ties technical fixes to economic outcomes. That means stronger regulatory oversight, transparent procurement and contract management, and active measures to curb vandalism and theft, including community-engaged protection of critical assets. Private investment will only flow at scale when investors see predictable returns, enforceable contracts, and a credible plan to reduce political and operational risk. The 2013 privatization was a step in the right direction, but without parallel fixes in transmission, gas supply, and regulation, privatization alone cannot deliver universal power.

Nigeria’s failure to move decisively beyond a 5,000 MW reality is not a single scandal but the sum of many small, avoidable failings. The silver lining is that the solutions are known, measurable, and implementable: targeted grid investment, gas security, market discipline, decentralized renewables, and clean governance. If policymakers, investors, and communities align around those priorities, the next quarter-century need not repeat the last. For now, though, the hum of private generators remains the soundtrack of a country whose power potential far outstrips its delivered electrons.