Nigeria’s power sector shrinks 10.63%, contracts for second straight quarter

Nigeria’s electricity, gas, steam and air-conditioning supply sector contracted for the second consecutive quarter in 2026, shrinking by 10.63% year-on-year in real terms in Q2.

This is according to the latest Gross Domestic Product (GDP) report by the National Bureau of Statistics (NBS).

The contraction, although an improvement from the 15.30% decline recorded in Q1 2026, highlights continued weakness in one of the economy’s most critical infrastructure sectors.

The performance contrasts sharply with the broader economy, which grew by 4.43% in real terms in Q2 2026, up from 4.23% in the corresponding quarter of 2025.

What the data is saying

The NBS data shows that the sector’s real output continued to decline despite an increase in its nominal value.

• In nominal terms, the electricity, gas, steam and air-conditioning supply sector grew by 0.87% year-on-year in Q2 2026, compared with 4.98% in Q1.
• The sector’s nominal value rose from N324.83 billion in Q1 to N1.26 trillion in Q2, reflecting the difference between nominal economic value and real output.

The continued real contraction suggests that higher nominal values have not translated into stronger underlying sector activity.

Get up to speed

Electricity supply remains a major constraint on Nigeria’s productive capacity. Manufacturers, businesses and households continue to depend on the national grid alongside diesel- and petrol-powered generators to meet their energy needs.

• The latest performance points to persistent structural challenges across the electricity value chain, including inadequate generation and transmission capacity, gas supply constraints, ageing infrastructure and liquidity problems affecting market participants.
• These challenges can increase operating costs for businesses, limit industrial production and weaken productivity, potentially slowing the pace of economic expansion even when other sectors are performing better.
• The latest decline also marks a reversal from the improvement recorded in 2025.

Nairametrics earlier reported that Nigeria’s electricity generation increased by 10.92% in Q1 2025, supported by improved availability and operating performance of thermal and hydropower plants.

• Thermal plants were the main contributors to that increase, with 16 of the 23 thermal power plants connected to the national grid recording higher average hourly output compared with the previous quarter.
• The more recent GDP figures suggest that those gains have not yet translated into sustained real growth in the electricity and gas sector.

Despite the challenges, the sector generated N62.12 billion in Company Income Tax (CIT) in 2025, highlighting its significant economic footprint.

What you should know

Nairametrics earlier reported that Nigeria’s Gross Domestic Product (GDP) grew by 4.43% year-on-year in real terms in the second quarter of 2026, up from 4.23% recorded in the corresponding quarter of 2025.

The World Bank has maintained its 4.4 per cent growth forecast for Nigeria in 2027.

S&P Global Ratings upgraded Nigeria’s long-term foreign and local currency credit ratings to ‘B’ from ‘B-’.