Nigeria is losing a staggering $26 billion annually due to power shortages, according to a new report, as the country battles ongoing issues with its national electricity grid.
The report, from Standard Bank’s Africa Trade Barometer, reveals that this immense financial loss excludes the billions spent on off-grid generators.
This finding has sparked serious concerns amid a wave of recent grid collapses, which have left many parts of the country in darkness.
The report paints a worrying picture of the impact of power shortages on Nigeria’s economy.
In addition to the estimated $26 billion lost to power failures, Nigerian businesses reportedly spend another $22 billion each year on off-grid fuel, primarily for generators.
“This expenditure further strains business operations, increasing production costs and reducing profit margins,” the report noted.
These power shortages are a major barrier to economic growth, the report warned, highlighting how unreliable electricity supply is crippling Nigerian businesses.
The report explains that “blackouts lead to production downtime, threaten the quality of goods needing controlled environments, disrupt water supplies, and affect telecommunications infrastructure.”
According to Standard Bank, the daily demand for electricity in Nigeria is nearly four times what the national grid can provide.
This shortfall means that many businesses face regular blackouts, which disrupt operations and reduce income.
In recent weeks, Nigeria’s national grid has suffered multiple collapses, creating power outages across the country.
Just this month, the grid collapsed three times within seven days, sparking outrage and frustration among citizens and businesses alike.
These frequent blackouts have reignited debates over Nigeria’s energy policies and the urgent need for infrastructure investment.
The National Electricity Regulatory Commission (NERC) said a transformer explosion at the Jebba transmission station triggered one of these outages.
“Initial reports on the grid disturbance indicate that an explosion of a current transformer at the Jebba station caused a cascade of power plant shutdowns,” NERC stated.
As the national power provider struggles to meet demand, the government and regulatory bodies have faced increasing pressure to address the root causes of these outages.
Nigeria’s House of Representatives has announced plans to investigate the frequent grid collapses.
Lawmakers argue that finding a solution to these outages is essential to prevent further harm to the nation’s economy.
For businesses, the economic consequences of unreliable power are severe.
“Frequent power outages lead to reduced sales, lost productivity, and damaged equipment,” the report warned.
Businesses that rely on continuous power to keep products fresh or to operate critical equipment are especially vulnerable.
The energy crisis has had a particularly harsh impact on small and medium-sized enterprises (SMEs), which are often unable to afford expensive generators or fuel.
The constant need for off-grid power has driven up operating costs for Nigerian businesses.
Experts say that, without urgent intervention, Nigeria’s energy crisis will continue to hurt economic growth.
According to Standard Bank’s report, “power supply infrastructure is one of the most significant obstacles to business operations across African markets.”
In Nigeria, however, the problem is especially acute due to the high rate of grid collapses.
The report comes as the Nigerian government is under pressure to raise electricity tariffs to fund repairs and expansions in the national grid.
The government recently said that only 1.5 million customers would be affected by the proposed tariff hikes.
However, many Nigerians fear that the increased costs will further strain an already struggling population.
Power shortages have been an ongoing issue in Nigeria for decades, despite numerous attempts by past administrations to improve the grid.
While various power sector reforms have been launched, significant progress has remained elusive.
