Christopher Okpoko
Escalating conflict in the Middle East and Russia’s ongoing war in Ukraine underscores the continued energy security risks that the world faces. Many of the new energy security challenges in a decarbonising world arise in the power sector as societies depend more on electricity for their energy needs.
There are two core elements of electricity security: the ability to ensure sufficient capacity to meet peak demand (adequacy), and the ability to manage fluctuations in both demand and renewable energy supply (flexibility).Nigeria, a country endowed with vast energy resources, has the potential to become a major player in the global energy market.
As 2025 evolves, it is crucial to explore the dynamics that will shape Nigeria’s energy landscape, focusing on its power, oil and gas sectors, renewable energy initiatives, the role of technology, and the challenges the country faces. According to the Nigerian Electricity Regulatory Commission (NERC), as of the third quarter of 2024, there were 28 grid-connected power plants consisting of 19 gas, five hydro, two steam, and two gas/steam-powered plants.
The average available generation capacity of the grid-connected power plants was 5,100.90MW. The Nigerian government stated that access to energy for all Nigerians is a top priority for the country, aiming to reach an access rate of 90% by 2030. However, according to Stantec’s market report (2024), Nigeria leads the top 20 countries worldwide having the largest energy access deficits with the biggest unserved population of 88.5 million (59.5% access to electricity rate). Despite government interventions, electrification efforts have failed to bridge the access gap and keep pace with population growth.
In addition to the population without access to electricity, an estimated 22 million small backup diesel generators are installed in Nigeria with a capacity of 42 gigawatts – about eight times the installed peak generating capacity of the main grid. 78% of main grid customers in Nigeria report that the grid “works about half the time, occasionally, or never” Power transmission and distribution infrastructure remained very weak with the national grid recording 12 incidents of collapse in 2024.
Therefore, to further revamp Nigeria’s electric power landscape efforts to expand power generation and improve transmission infrastructure must continue to increase the share of renewable energy sources in the energy mix. Improved power sector management and governance would help to reduce outages and transmission losses.
Failure to do so would impede industrial growth and mean continued high use of polluting back-up generation.The energy sector outlook is expected to witness a transformation of the grid, ensuring long-term stability and reliability in power supply, and improved access to power.
However, this will depend on the implementation of key policies by the Bola Tinubu administration this year that could become the game changer, which includes: The commissioning of the 52MW Maiduguri Emergency Power Project (MEPP), Kaduna power project (Kudendan Power Plant), and the 375MW Egbema Power Station, Imo State.
The next phase of the Presidential Power Initiative (PPI)Expected stable power grid with completion of the Siemens Project Phase 1Breakthrough with the energy transition plans with German support.
The commissioning of the 10 power transformers and 10 mobile substations that have been imported, installed, and mostly inaugurated, adding 750 megawatts to the transmission grid’s capacity and the remaining units that were expected to be inaugurated before the end of 2024, to further increasing the grid’s capacity by an additional 150 megawatts.
Nigeria is the 16th largest oil producer globally, the largest in Africa, and a significant member of the Organization of the Petroleum Exporting Countries (OPEC), according to the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Engr.
Gbenga Komolafe, the country boasts proven reserves of 37.50 billion barrels and a production capacity of approximately 2.19 million barrels per day (mbpd). As of July 23, 2024, Nigeria’s average daily production is 1.61 mbpd.Crude oil theft and pipeline vandalism continue to be significant challenges, particularly affecting terminals at Bonny, Brass, and Forcados. In 2022, the Nigerian National Petroleum Corporation (NNPC) reported a loss of $700 million per month due to oil theft. Between 2005 and 2021, Nigeria lost an estimated 619.7 million barrels of crude oil. NNPC also deactivated 6,409 illegal refineries in the Niger Delta region. As of last year, 4,846 illegal pipes out of 5,543 connection points had been disconnected, indicating that a substantial number of these connections still remain.
Despite these issues, crude oil remains the cornerstone of the Nigerian economy, contributing 70-80% of government revenue, about 95% of foreign exchange earnings, and accounting for approximately 40% of GDP. The outlook for oil production as of 2025 remains relatively optimistic, although it is fraught with uncertainties. Oil reserves are expected to retain their importance; however, fluctuating global oil prices, geopolitical tensions, and environmental concerns may affect output levels. The Nigerian government is actively pursuing reforms aimed at increasing operational efficiency and attracting foreign investments to enhance production capacity. Improved production techniques and exploration of new oil fields are anticipated to elevate Nigeria’s status as a leading oil exporter.
Natural gas is another crucial element of Nigeria’s energy mix. Owning the sixth-largest gas reserves globally, Nigeria has an opportunity to strengthen its position as a leader in gas production. In 2025, the nation aims to ramp up domestic gas utilization to meet local energy demands while enhancing its liquefied natural gas (LNG) export capabilities. Projects like the Nigeria-Morocco Gas Pipeline exemplify efforts to diversify markets and maximize gas exports.
According to Dr. David Ige, former Group Executive Director, Gas & Power at NNPC, despite having the world’s ninth-largest reserves of natural gas, with over 209 trillion cubic feet (TCF), Nigeria’s global market share of exports has declined from 15% to just 2% in recent years. The Nigerian Gas Master Plan, designed as a major initiative to boost production and supply of gas, has been stalled in phase one for 18 years.
From 2017 to 2023, Nigeria managed to grow its domestic gas market by approximately 1.3 million cubic feet per day, reaching about 1.5 to 1.55 million cubic feet, representing only a 3% annual growth rate, while gas exports have also experienced a decline. Additionally, the divestment of International Oil Companies (IOCs) from Nigeria’s upstream oil and gas sector has raised critical questions regarding the industry’s future.