The Nigerian electricity sector, classified with gas, steam and air conditioning supply recorded a 78.16% year-on-year real GDP growth in the second quarter of 2021. This is by far the highest growth rate record by any sector in the review period.
This was contained in the recently released Gross Domestic Product (GDP) report, by the National Bureau of Statistics (NBS). Nairametrics had earlier reported a significant 5.01% boom of the Nigerian economy in the period, as released by the NBS.
According to the report, Nigeria’s non-oil sector of the economy was largely driven by growth recorded in trade, telecommunication, road transport, electricity, crop production, and food production.
Also, on a half-year basis, the sector grew by 56.58% year-on-year compared to a contraction of 2.78% recorded in the corresponding period of 2020. Meanwhile, when compared to the previous quarter, the sector recorded a growth of 264.23% to a real aggregate of N134.19 billion in Q2 2021, as opposed to N36.84 billion recorded in Q1 2021.
The significant increase in the sector’s GDP value is largely attributed to the increase in electricity tariff in the country. Recall, that in January 2021, the Nigerian Electricity Regulatory Commission (NERC) instructed DisCos to increase electricity tariffs.
Electricity tariff increase across the country ensured a significant increase in the sector’s GDP, as Nairametrics estimates the tariff increase to be around 60 to 70% depending on the various DisCos.
In terms of the sector’s contribution to the total aggregate GDP, Electricity, gas, steam and air conditioning supply only accounted for 0.8% of the total real GDP. This is a significant leap compared to 0.22% recorded in the preceding quarter. It is worth noting that the sector is not entirely about electrical supplies and includes others like gas, steam and air conditioning.
In nominal terms, the Electricity, Gas, Steam and Air Conditioning Supply sector recorded a year-on-year growth of 114.30% in the second quarter of 2021. This was 105.66% points higher than the 8.64% growth rate recorded in the corresponding quarter of 2020, and 83.60% points higher than the growth rate of 30.70% recorded in the quarter before.
What you should know
The sector’s growth is largely due to increases in the tariff of electricity in the country, and yet another upward review is due for September, under the Service-Based Tariff (SBT) programme of NERC. The electricity sector recorded the highest sectoral growth in the Nigerian economy in the review period.