Nigerian Economy Loses N10trn Annually to Unreliable Electricity — CPPE

BY CHIKA IZUORA AND BUKOLA ARO-LAMBO, Lagos

Nigeria’s economy is losing as much as N10 trillion annually due to unreliable electricity supply, a development that continues to fuel inflationary pressures and weaken business sustainability, the chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has said.

Noting that persistent power shortages have entrenched a structural cost burden on businesses and households across the country, Yusuf explained that the country’s weak electricity infrastructure has forced widespread reliance on petrol and diesel-powered generators, with annual spending on self-generation estimated at over N3.7 trillion.

According to him, the combined impact of lost productivity and high energy costs has resulted in economic losses ranging between N7 trillion and N10 trillion yearly. “This structural dependence on expensive alternative energy sources has created a strong transmission channel from global oil price shocks to domestic inflation,” he said.

The CPPE boss warned that the situation is further compounded by rising global crude oil prices triggered by geopolitical tensions involving Iran, Israel and the United States, which have disrupted supply routes, including the Strait of Hormuz.

He noted that the surge in oil prices above $100 per barrel has led to higher fuel costs, increased transportation expenses and rising production costs, all of which feed directly into inflation. Despite a marginal easing of headline inflation to 15.06 per cent in February from 15.10 per cent in January, Yusuf stressed that underlying price pressures remain significant.

“Disinflation simply means a slower increase in prices, not a reduction in the cost of living,” he stated.

He added that households continue to face mounting pressure from rising food, transport and energy costs, while businesses, particularly small and medium enterprises, are grappling with elevated operating expenses and weak consumer demand. “This has led to shrinking profit margins, declining productivity and increased vulnerability across key sectors of the economy,” Yusuf said.

He emphasised that addressing Nigeria’s electricity deficit remains critical to reducing inflation and improving economic performance. According to him, a reliable power supply would significantly lower production and logistics costs, enhance competitiveness and ease pressure on prices.

Yusuf called for urgent investments in electricity generation, transmission and distribution infrastructure, alongside support for decentralised energy solutions. He also advocated policies to accelerate the adoption of renewable energy through tax waivers on solar equipment and other clean energy technologies.

He also urged the government to strengthen domestic refining capacity and ensure stable crude supply to local refineries to moderate fuel prices and reduce foreign exchange pressures. Yusuf further advised authorities to remain cautious in monetary and fiscal policy decisions, warning that external shocks could reverse recent gains in inflation moderation.

“The economy remains highly vulnerable to energy shocks, and without decisive action on power supply, inflationary pressures will persist,” he said, stressing hat a coordinated and forward-looking policy response is essential to reduce the economic losses associated with unreliable electricity and support sustainable growth.