Get Guardian on Google• DisCos ration 3,000MW as premium customers spend more on alternative power
• N1.23tr legacy debt paid to GenCos fails to address liquidity crisis
Nigeria’s electricity crisis could deepen as the dry season sets in, threatening to reverse the modest gains recorded during the rainy season and exposing the country’s persistent generation shortfall, mounting debts to power producers and gas suppliers, and failures across the electricity value chain.
Despite the operation of more than 20 power generating companies, electricity generation has remained largely stagnant. It fell from an average of 3,849.60 megawatts (MW) in August to 3,549.02MW in November, after rising marginally from 3,823.66MW in April.
The decline has renewed concerns about the country’s ability to sustain electricity supply as water levels in hydroelectric dams drop, demand for cooling rises and liquidity constraints continue to disrupt the gas-to-power value chain.
Managing Director of Azura Power Plant, Edu Okeke, said the temporary improvement in electricity supply during the rainy season often creates the false impression that Nigeria’s power problems have been resolved, even though the underlying generation deficit remains largely unaddressed.
According to him, higher water levels in dams during the rainy season enable hydroelectric plants to operate more efficiently, while cooler temperatures reduce demand as households and businesses use less air conditioning.
He, however, warned that the situation changes in the dry season, when falling water levels constrain hydropower generation and demand rises, exposing the inadequacy of available electricity supply.
“In the rainy season, the dams are full and hydros are performing optimally. Also, demand is reduced as people don’t turn on their ACs. We go out claiming we have fixed all,” he said.
“Then dry season and water level goes down. Hydros reduce their output and all of a sudden, blame game,” he added.
The seasonal pattern highlights the danger of interpreting temporary improvements in electricity supply as evidence of structural progress, particularly when the country has yet to resolve the financial and operational constraints affecting thermal generation, which remains heavily dependent on natural gas.
The liquidity problem is particularly troubling because the Federal Government has already paid about N1.23 trillion out of over N4 trillion legacy debts owed to power generation companies (GenCos) through bond issuances, with plans to clear the outstanding balance next year.
However, the intervention has yet to resolve the wider payment crisis confronting the electricity market, with obligations to generation companies, according to the Nigerian Electricity Regulatory Commission (NERC), continuing to increase by more than N1.5 trillion yearly.
Data from the Nigerian Bulk Electricity Trading Company (NBET) showed that between January and April 2026, the government and electricity market were unable to pay GenCos approximately N491 billion for electricity supplied.
The pressure also extends to gas suppliers, whose payments are critical to sustaining fuel deliveries to thermal power plants.
Within the same four-month period, gas suppliers were owed approximately N82 billion, as the sector paid only N60 billion of the N142 billion cost of gas taken up.
The payment shortfall raises concerns about the ability of gas suppliers to sustain deliveries to power plants when commercial obligations remain unsettled, potentially worsening generation constraints as the dry season progresses.
The figures illustrate a fundamental weakness in the electricity market, which shows that even where generating plants are available, insufficient payments across the value chain can undermine the supply of fuel required to convert installed capacity into actual electricity.
The problem is compounded by disagreements over whether gas availability or transportation constraints are responsible for the decline in generation.
The Nigerian Independent System Operator (NISO) had identified inadequate gas supply to thermal power stations and reduced water inflows into hydroelectric reservoirs as major constraints affecting electricity generation.
However, the Nigerian National Petroleum Company Limited (NNPC) disputed the suggestion that constraints within its gas transportation infrastructure were responsible for the decline.
In a clarification, NNPC said the gas transportation network operated by its subsidiary, NNPC Gas Infrastructure Company Limited (NGIC), remained available to support deliveries to power generating stations nationwide.
The company said its operational records did not indicate transportation-related constraints within its network that could explain the reduction in electricity generation.
NNPC also said its gas production volumes had grown by approximately 10 per cent year-to-date in 2026, attributing the increase to the Federal Government’s gas development and monetisation agenda.
The company, however, acknowledged the need for a comprehensive assessment of gas production, commercial supply arrangements, actual deliveries to individual power plants, generating-unit availability and maintenance schedules.
For consumers, however, the consequences are already evident in persistent outages and growing disagreements among operators over responsibility for supply failures.
Data from the national grid showed that the 11 electricity distribution companies received a combined allocation of 3,033MW yesterday, significantly below the country’s electricity requirements, which have increased due to more pressure for air conditioning and refrigeration.
Abuja Electricity Distribution Company received the highest allocation of 526MW, followed by Ikeja with 467MW, Eko with 458MW and Ibadan with 325MW. Port Harcourt received 266MW, Benin 220MW, Enugu 211MW, Kano 173MW, Kaduna 167MW, Jos 146MW and Yola 74MW.
The supply constraints have also intensified disagreements between the Transmission Company of Nigeria (TCN) and Ikeja Electric over the causes of recent outages.
The dispute followed Ikeja Electric’s attribution of interruptions recorded on November 3 and 4 to grid instability. TCN challenged the explanation, saying its operational records showed that 68 per cent of interruptions recorded on November 1 and 2 resulted from frequency-control load shedding caused by low generation.
It attributed another 26 per cent to Ikeja Electric’s network faults, maintenance and alleged non-compliance with load allocations, while the remaining six per cent resulted from planned maintenance, switching operations and line limitations.
In a breakdown of 46 interruptions involving 33kV feeders listed in Ikeja Electric’s notice, TCN attributed 29 to low-generation load shedding, 14 to the distribution company’s network and operational issues, and three to planned maintenance on its Ogba-Alimosho line.
TCN maintained that none of the interruptions in the records it examined resulted from a fault or trip involving its equipment.
The disagreement has further exposed the difficulty consumers face in identifying responsibility for outages across the electricity value chain, even as they continue to pay tariffs linked to stipulated service levels.
The situation has become particularly contentious for Band A customers, who pay premium tariffs for a minimum of 20 hours of electricity daily but increasingly complain that distribution companies are failing to meet the obligation.
Responding to the complaints, the Lagos State Electricity Regulatory Commission (LASERC) said it had commenced an investigation into Ikeja Electric’s operations and would require the company to compensate affected Band A customers.
The Commission’s Chief Executive Officer, Temitope George, told The Guardian that deliberate breaches would attract sanctions under existing laws.
“LASERC has commenced the necessary investigations and is in communication with all stakeholders. The Disco will be required to compensate all Band A customers who received less than the service level. In the event of deliberate breach, adequate sanctions will be applied in accordance with extant laws,” she said.
George added that Ikeja Electric would be required to acquire fault passage indicators (FPI) to improve monitoring and fault detection across its distribution network.
The Guardian contacted Ikeja Electric’s Corporate Communications team for its response to TCN’s allegations, including claims of non-compliance with load allocation directives, the causes of the recorded interruptions and measures to compensate affected customers. The company had yet to respond as of the time of filing this report.
Beyond households, the crisis is increasingly undermining industrial productivity and forcing manufacturers to divert more resources into alternative electricity.
The Manufacturers Association of Nigeria (MAN) disclosed that manufacturers spent approximately N1.35 trillion on alternative power in 2025, representing an increase of about 23 per cent from N1.1 trillion in 2024.
Its immediate past president, Francis Meshioye, said energy accounted for more than 40 per cent of manufacturing costs, warning that the cost of securing reliable electricity was threatening business survival and consuming up to 60 per cent of operating profits in some cases.
The Executive Director of Universal Luggage Limited, Frank Onyebu, disclosed that his company had reduced operations from three shifts to two, then one, before eventually operating every other day as rising costs made continuous production increasingly difficult.
Data from the Nigerian Electricity Regulatory Commission (NERC) showed that 10 companies and institutions secured captive generation permits with a combined capacity of 54.94MW between January and June 2026.
They included BUA Cement, Nigerian Breweries, African Consulting Office and Energy, Power Gas Edebei, Modibbo Adama University, Federal University of Dutsin-Ma, Federal University of Lafia, University of Uyo, University of Port Harcourt and the University of Port Harcourt Teaching Hospital.
The permits allow the organisations to generate electricity for their own needs rather than depend entirely on commercial supply from distribution companies.
Solar investment is also expanding as businesses and households seek alternatives to unreliable grid electricity. The Africa Solar Industry Association said approximately 89MW of new solar capacity had become operational in Nigeria as of October 2026, while another 115MW remained under construction.
However, the growing shift towards captive generation and solar power raises questions about the long-term sustainability of distribution companies as large consumers increasingly seek to reduce their dependence on the national grid.
NERC’s second-quarter 2026 operational and commercial performance report showed that distribution companies recorded average aggregate technical, commercial and collection losses of 36 per cent, against an allowed average target of 16.92 per cent.
Meanwhile, the seasonal decline in supply is coinciding with increasingly uncomfortable temperatures. The Nigerian Meteorological Agency recently recorded 41 degrees Celsius in Nguru, Yobe State, and 34 degrees Celsius in Lagos.
For households without reliable electricity, the heat compounds the consequences of outages, while food vendors, cold-room operators, pharmacies and healthcare facilities face additional risks from inadequate refrigeration and cooling.
