Nigeria’s economic think-tank, the Centre for the Promotion of Private Enterprise (CPPE) has raised concerns over the worsening state of Nigerian power sector after the electricity and gas sector contracted 15.30 per cent in the first quarter of 2026.
The CPPE described the development as the weakest performance recorded by the sector in recent years, warning that it poses serious risks to economic growth, industrial productivity and business competitiveness.
The Chief Executive Officer of the CPPE, Dr. Muda Yusuf, said in a policy brief on the National Bureau of Statistics’ Q1 2026 Gross Domestic Product report released on Wednesday that although Nigeria’s economy grew 3.89 per cent in Q1 2026 compared to 3.13 per cent in the corresponding period of 2025, the sharp decline in the electricity and gas sector remained a major concern.
“The most troubling aspect of the report is the sharp contraction of the electricity/gas sector by 15.30%, making it the weakest-performing sector in the quarter and the steepest contraction recorded by the sector in recent years. This underscores the deepening fragility of Nigeria’s power sector and raises serious concerns about the sustainability of economic growth, industrial productivity and business competitiveness,” Yusuf stated.
He noted that electricity remained the foundation of productivity, industrialisation and inclusive economic growth, stressing that the contraction reflected persistent structural weaknesses in power generation, transmission and distribution.
“This development is concerning because electricity is not merely another economic sector; it is the foundation upon which productivity, industrialisation, competitiveness and inclusive growth depend. A contraction of this magnitude signals persistent structural weaknesses across generation, transmission and distribution, as well as continuing liquidity and governance challenges within the power sector,” Yusuf noted.
The CPPE warned that worsening electricity supply would further increase production costs for businesses already grappling with high interest rates, rising logistics expenses and weak consumer purchasing power.
“The implications for businesses are severe. At a time when firms are already burdened by high interest rates, logistics costs and weak consumer purchasing power, deteriorating electricity supply further escalates production costs and weakens competitiveness. Heavy dependence on diesel and petrol-powered self-generation continues to erode profitability across the manufacturing, SME, hospitality, agro-processing and digital sectors,” the report by Punch newspaper on Saturday quoted Dr. Yusuf as saying.
The think-tank said sustainable economic transformation could not be achieved without stable and affordable electricity supply, adding that gains recorded in other sectors might not be sustainable under fragile energy infrastructure.
The CPPE therefore called for urgent reforms across the electricity value chain, including stronger investment in transmission infrastructure, improved market liquidity, accelerated metering and governance reforms to restore investor confidence in the sector.
GIK/APA