Nigeria’s trillion-dollar economy is running on generators
Ask how Nigeria’s power problem is going, and you will be handed a number: the megawatts the country generated last week, last month, last year. It is the wrong number to watch. The revealing figure is not how much electricity Nigeria produces, but how much its people pay to avoid needing the grid at all. […] The post Nigeria’s trillion-dollar economy is running on generators appeared first on…
Nigeria's economy faces significant challenges due to its power situation, which is largely dependent on privately owned generators. The country's installed generation capacity of around 13,600 megawatts is far below the actual electricity needed by its more than 200 million people. In practice, only about 5,000 megawatts reach Nigerians, highlighting the inadequacy of the public grid. This gap is primarily due to insufficient gas supply to power plants and energy losses during transmission.
In response to this power crisis, Nigerians have quietly built their own electricity system, one generator at a time. Estimates suggest that privately owned generating capacity now ranges from 15,000 to 20,000 megawatts, compared to the public grid's struggle to deliver 5,000 megawatts. This privately generated electricity accounts for nearly half of the electricity used across the country, costing between 10 to 14 billion US dollars annually.
For instance, Aliko Dangote's industrial group generates 1,500 megawatts for its own use, which is more than what many states draw from the grid.
While owning a generator may seem like a rational business decision to ensure reliable power, it is an expensive and wasteful approach that costs businesses valuable resources. Nigeria's manufacturers alone spent about 1.34 trillion naira on powering their operations in 2025, a fifth more than the previous year and more than fifty times what they spent over a decade ago. This expenditure swallows around forty percent of the cost to run a factory, preventing businesses from investing in other productive assets.
The private power system's inefficiency is a result of a coordination failure. While a single generator may be practical, millions of them create a duplicated and costly power industry. This situation is not just affecting businesses but also households, with every enterprise paying twice for power – once through taxes and tariffs for an underperforming grid, and again out of pocket for the private generators.
Written by urgent.news from Nairametrics's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
