Nigeria’s energy wealth has long powered exports, but policymakers and experts are warning that the country’s greatest opportunity lies in using those resources to fuel small businesses, jobs, and local industries.
At the heart of this shift is the Electricity Act 2023, which hands states authority to regulate their own electricity markets. Analysts say this reform could finally enable solutions tailored to the needs of small and medium-sized enterprises (SMEs)—the backbone of the economy—many of which still spend more on diesel than on business expansion.
“Think of a food processor losing half its produce to spoilage or a market cluster spending fortunes on generators. That is the cost of unreliable power. Our energy resources must start working for Nigerians first,” one sector adviser said.
Localised power, stronger SMEs
Experts argue that SME-focused energy models—mini-grids, embedded gas plants, and solar-hybrid systems—can cut costs and boost productivity if linked directly to clusters such as markets, agro-processing hubs, ICT parks, and industrial estates. Regulators, they add, must approve flexible tariffs for “productive use” while providing room for private-led projects.
The Petroleum Industry Act (PIA) also comes into play. Its domestic gas delivery obligations could supply reliable feedstock to local businesses, provided enforcement is strict and infrastructure gaps are bridged. Financing remains a stumbling block: banks view SME energy projects as risky. Advocates are calling for government-backed loan guarantees and local-currency bonds to reduce investor risks.
Implementation, not policy, is the gap
Nigeria has no shortage of energy policies, from the PIA of 2021 to the Electricity Act of 2023. The problem, insiders say, is enforcement.
Take metering: despite legal requirements for prepaid meters, millions of Nigerians remain unmetered, leaving distribution companies (DisCos) underperforming. In Q1 2025, none met their technical and commercial loss targets. Similarly, despite anti-flaring laws, gas continues to be wasted because penalties are weakly applied and flare-to-power projects stall under unclear rules.
“Policy design is not our bottleneck. Implementation and enforcement are,” one expert stressed.
New models for financing energy growth
Innovative financing is emerging as a game-changer. Prepayment deals—where lenders provide cash upfront against future oil or gas deliveries—are already being deployed, such as Afreximbank’s multi-billion-dollar facility for NNPC Limited.
Green bonds are another opportunity. Backed by Nigeria’s 2018 regulatory framework, they could unlock international climate-focused capital for renewable plants, cleaner gas facilities, and grid upgrades. Industry watchers also point to securitisation—packaging predictable energy revenues into tradable securities—as a way to attract investment without traditional debt.
Accelerating gas for power and industry
Nigeria’s vast 210 trillion cubic feet of gas reserves remain underutilised, even as industries struggle with energy shortages. Analysts say modular solutions—compressed natural gas (CNG) hubs, mini-LNG, virtual pipelines, and aggregation centres—must be prioritised. The Presidential CNG Initiative has signalled commitment, but private investment is critical to replicate and expand projects nationwide.
Large industrial users such as refineries, fertiliser plants, and cement makers are being urged to commit to firm supply contracts, creating financial certainty for investors to back new gas projects.
Lessons from privatisation
Looking back at Nigeria’s post-privatisation power reforms, experts highlight both progress and pitfalls. While breaking up the Power Holding Company of Nigeria (PHCN) created GenCos and DisCos under private ownership, systemic problems persist: poor collections, high losses, metering gaps, and tariff shortfalls.
Transmission bottlenecks, vandalism, and weak coordination between gas and power systems continue to hamper supply. Recent regulatory clashes—such as Enugu’s tariff dispute between state and federal authorities—underscore the need for clearer, coordinated oversight.
The road ahead
Energy leaders argue that the next phase must focus on enforceable reforms:
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Complete metering for all customers.
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Enforce cost-reflective tariffs with targeted subsidies.
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Make government support conditional on company performance.
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Ensure strict enforcement of gas flaring and supply obligations.
“Nigeria must start measuring success not by export volumes but by the businesses it powers and the jobs it creates,” one adviser concluded.
