The Nigerian electricity sector faced a downturn in the fourth quarter of 2024 (Q4 2024), as the electricity production index declined by 1.64% year-on-year (y-o-y).
This is according to data from the Central Bank of Nigeria (CBN).
This marks a reversal from the 5.55% growth recorded in the third quarter of 2024 (Q3 2024), underscoring persistent challenges in the country’s power sector.
According to the data, the Nigerian economy witnessed widespread expansion in the fourth quarter of 2024 (Q4 2024), with 21 out of 22 subsectors recording positive growth.
On a quarter-on-quarter (q-o-q) basis, however, the subsector showed signs of recovery, as the index rose by 22.50% compared to a significant decline of 49.46% in the previous quarter.
As a result, the average estimated electricity generation rose by 2.34% to 4,206.50 megawatts per hour (MW/h) from 4,110.47 MW/h in Q3 2024. Similarly, electricity consumption saw a modest increase of 2.63%, reaching 4,105.66 MW/h from 4,000.24 MW/h in the preceding quarter.
Drivers of Economic Growth
The broad-based economic expansion in Q4 2024 can be attributed to several factors, including improved business confidence, increased consumer spending, and enhanced performance in key sectors such as agriculture, manufacturing, and telecommunications.
- The government’s fiscal and monetary policies, aimed at stabilizing inflation and boosting investment, also contributed to the positive momentum.
- According to the CBN, the improvement was largely attributed to enhanced gas supply to thermal power stations and the continued implementation of the Siemens Power Project, which has positively impacted power generation, transmission, and distribution networks.
- Notably, the oil and gas sector benefited from relatively stable crude oil prices and improved domestic production, which provided a boost to overall economic output.
The data also stated that the non-oil sector, particularly fintech and digital services, also played a significant role in driving economic activities.
Challenges in the Power Sector
Despite the slight improvement in quarter-on-quarter electricity output, the power sector continues to grapple with infrastructural deficiencies, liquidity issues, and transmission bottlenecks.
- The decline in electricity production on a year-on-year basis suggests that systemic issues remain unresolved, requiring targeted policy interventions.
- The Siemens Power Project, which is expected to address some of these challenges, has shown early signs of impact, but industry stakeholders emphasize the need for sustained investment and reforms to ensure long-term stability in power generation and distribution.
- Recently, Nairametrics reported that the Niger Delta Power Holding Company (NDPHC) called for urgent presidential intervention to secure funding for ongoing power projects and settle outstanding payments owed to Generation Companies (GenCos), as part of efforts to improve electricity supply across Nigeria.
The power sector is characterized by severe liquidity challenges, with over N4 trillion owed to GenCos, which has hindered their ability to operate efficiently.
