Nigeria Loses N10trn Yearly To Power Crisis

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, has said Nigeria’s economy is losing as much as N10tn annually due to unreliable electricity supply, a situation he warned is worsening inflationary pressures and undermining business sustainability.

Yusuf explained that persistent power shortages have entrenched a structural cost burden on businesses and households, forcing widespread reliance on petrol and diesel-powered generators.

He noted that annual spending on self-generation is estimated at over N3.7tn.

According to him, the combined effect of lost productivity and high energy costs has resulted in economic losses ranging between N7tn and N10tn each year.

He added that reliance on costly alternative energy sources has created a direct channel through which global oil price shocks affect domestic inflation.

The economist warned that the situation is being further aggravated 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 continue to feed into inflation.

Despite a slight 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 strong. “Disinflation simply means a slower increase in prices, not a reduction in the cost of living,” he said.

He added that households are facing 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.

According to him, this has resulted in shrinking profit margins, declining productivity, and increased vulnerability across key sectors.

Yusuf emphasised that addressing Nigeria’s electricity deficit is critical to curbing inflation and improving economic performance. He said a reliable power supply would significantly reduce production and logistics costs, enhance competitiveness, and ease price pressures.

He 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, including tax waivers on solar equipment and other clean energy technologies.

The CPPE boss further 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.

He cautioned policymakers to remain careful in monetary and fiscal 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,” Yusuf said, stressing that a coordinated and forward-looking policy response is essential to reduce economic losses and support sustainable growth.