Nigeria’s power sector shrinks 10.63%, contracts for second straight quarter

Nigeria's electricity, gas, steam, and air-conditioning supply sector contracted by 10.63% year-on-year in real terms during the second quarter of 2026, marking the second consecutive quarter of decline. This contraction, although slight improvement from the 15.30% decline in the previous quarter, underscores ongoing challenges faced by one of the country's crucial infrastructure sectors.

In contrast, the broader economy expanded by 4.43% in real terms during the same period, demonstrating a wider economic growth compared to the specific sector.

The NBS data revealed that the sector's real output continued to decline despite a rise in its nominal value, indicating that the latter had not translated into stronger underlying sector activity. Electricity supply remains a significant obstacle to Nigeria's productive capacity, with manufacturers, businesses, and households relying on a combination of national grid power and diesel and petrol-powered generators to meet their energy requirements.

Earlier reports indicated that Nigeria's electricity generation increased by 10.92% in Q1 2025, driven by improved performance of thermal and hydropower plants. Despite these improvements, the sector generated N62.12 billion in Company Income Tax (CIT) in 2025, illustrating its substantial economic contribution. The World Bank has maintained its 4.4% growth forecast for Nigeria in 2027, while S&P Global Ratings upgraded Nigeria's long-term foreign and local currency credit ratings to 'B' from 'B-'.