Nigeria’s Minister of Power, Adebayo Adelabu, revealed that Nigerians spent a staggering N16.5 trillion on diesel, petrol, generators, and related servicing in 2023, highlighting the country’s severe energy crisis due to the government’s failure to provide a stable electricity supply. Speaking at the 2024 Nigeria Oil and Gas conference in Abuja, Adelabu disclosed that while the formal power sector, encompassing electricity generation, transmission, and distribution companies, generated N1 trillion in revenue last year, the informal sector’s expenditures on alternative power sources far exceeded this amount.
The minister noted, “If you know how much our people spend buying diesel, petrol, generators, and servicing them in a year; the last study we had in 2023, a total of N16.5 trillion was spent on this in self (power) generation. Even a number of the industries are off the grid. They now have their captive power between their environments with gas-powered generators. So, spending in this sector out of the grid is close to N20 trillion.”
Adelabu emphasized the disparity between the informal spending on power and the formal sector’s revenue, stating that redirecting even a quarter of the informal spending to the official power sector could significantly improve Nigeria’s electricity supply. “If it is just a quarter of that put in the official power sector, we are talking about incremental revenue of N5 trillion that will bring the sector’s revenue to N6 trillion. Sincerely, we are going to have something close to uninterrupted 24/7 power supply in Nigeria,” he said.
He stressed the importance of earning the trust of power consumers, highlighting that electricity from the national grid is more cost-effective than diesel or petrol-powered generators. “That is what we are working on to ensure that trust is back, that confidence is back. All the manufacturing companies that are doing self-generation can cut it off and reconnect to the national grid because it is the cheapest source,” he explained.
Adelabu provided a cost comparison, indicating that Band A customers, who enjoy uninterrupted supply, pay N206 per kilowatt-hour, while companies with gas-powered captive power pay about N290/kWh. Petrol generator users pay approximately N450/kWh, and diesel generator users pay upwards of N900/kWh, making the national grid the cheapest and most efficient option for productive activities.
The minister also called on investors at the conference to consider investing in the development of Nigeria’s abundant non-associated gas reserves, highlighting the power sector’s significant consumption of the country’s domestic gas supply.