Nigeria’s Electricity, Gas Sector Posts 10.63% Real-Term Contraction in Q2 2026

Nigeria’s electricity, gas, steam and air-conditioning supply sector contracted by 10.63% year-on-year in real terms in the second quarter of 2026, marking its second consecutive quarterly contraction.

The latest Gross Domestic Product (GDP) report by the National Bureau of Statistics (NBS) showed that the sector’s decline moderated from the 15.30% contraction recorded in the first quarter of 2026.

The contraction came despite Nigeria’s broader economic growth, with real GDP expanding by 4.43% in Q2 2026, compared with 4.23% in the corresponding quarter of 2025.

In nominal terms, however, the electricity, gas, steam and air-conditioning supply sector grew by 0.87% year-on-year in Q2, compared with 4.98% in Q1.

The sector’s nominal value increased from N324.83 billion in Q1 to N1.26 trillion in Q2.

The divergence between nominal and real growth indicates that the increase in the sector’s monetary value did not translate into higher real output during the quarter.

The continued contraction highlights persistent challenges across Nigeria’s electricity value chain, including inadequate generation and transmission capacity, gas supply constraints, ageing infrastructure and liquidity challenges in the power market.

These challenges continue to affect businesses and households that rely on electricity from the national grid alongside diesel- and petrol-powered generators.

For businesses, unreliable electricity supply increases operating costs and can constrain production, particularly in energy-intensive sectors such as manufacturing.

The latest figures also point to a reversal from the improvement recorded in electricity generation in 2025.

Earlier data showed 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 the increase, with 16 of the 23 thermal power plants connected to the national grid recording higher average hourly output compared with the previous quarter.

Despite the recent contraction, the electricity and gas sector remains an important part of the economy. It generated N62.12 billion in Company Income Tax (CIT) in 2025.

Meanwhile, Nigeria’s real GDP growth accelerated to 4.43% in Q2 2026 from 3.89% in Q1 and 4.23% in Q2 2025.

The World Bank has maintained its 4.4% growth forecast for Nigeria in 2027, while S&P Global Ratings upgraded Nigeria’s long-term foreign and local currency credit ratings to ‘B’ from ‘B-’.