• CBN reports 1.64% decline in power generation in Q4 2024
• Gas production to remain flat in Q2 2025, says SEE
Tayo Busayo, Abuja
DAILY COURIER - The Nigerian energy sector experienced a mixed performance in recent months, with power generation slowing down while gas production is expected to remain stagnant in the second quarter of 2025. Reports from the Central Bank of Nigeria (CBN) and the Society of Energy Editors (SEE) highlight critical challenges affecting the electricity and gas industries, impacting both domestic consumption and exports.
Power generation decline in Q4 2024
The CBN reported that Nigeria’s electricity production index declined by 1.64% year-on-year (y-o-y) in the fourth quarter of 2024, marking a reversal from the 5.55% growth recorded in the third quarter. Despite a 2.34% increase in average estimated electricity generation to 4,206.50 megawatts per hour (MW/h) from 4,110.47 MW/h in Q3 2024, the sector faced a downturn due to infrastructural constraints and supply chain inefficiencies.
Electricity consumption also saw a modest increase of 2.63%, reaching 4,105.66 MW/h, yet remained insufficient to drive significant sectoral growth. However, on a quarter-on-quarter (q-o-q) basis, the subsector showed signs of recovery, as the index rose by 22.50% compared to a previous 49.46% decline in Q3 2024.
The CBN attributed the slight improvement to enhanced gas supply to thermal power stations and the continued implementation of the Siemens Power Project, which has positively impacted generation, transmission, and distribution networks.
Gas production outlook remains flat
In its Second Quarter 2025 Outlook, the Society of Energy Editors (SEE) projected that Nigeria’s gas production would likely remain unchanged unless major projects such as the ANOH Gas Plant and the Obiafu-Obrikom-Oben (OB3) Pipeline come on stream.
With Nigeria holding Africa’s largest proven gas reserves at 209 trillion cubic feet (TCF), sectoral challenges such as underinvestment in gas infrastructure, persistent gas flaring (8% of total production), and feedstock shortages continue to hinder growth. The report also warned that pipeline vandalism, particularly disruptions along the Trans-Forcados and Escravos-Lagos Pipelines, remains a key risk to Nigeria’s gas supply stability.
LNG exports and domestic gas utilization trends
Nigeria’s LNG exports, which account for 7% of the global LNG supply, are facing rising competition from Mozambique, Tanzania, and U.S. shale gas producers. However, spot LNG prices might rise, potentially improving Nigeria’s export revenues unless significant pipeline attacks disrupt supply.
Domestically, gas utilization is expected to see moderate growth, particularly through the Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) push. The Federal Government’s CNG initiative continues to face slow adoption due to high conversion costs (₦1.5–₦3 million per vehicle) and limited refueling infrastructure (only 50 operational stations nationwide).
The private sector, including firms like NIPCO and Axxela, is expanding CNG infrastructure, but progress remains sluggish. The report anticipates marginal growth in CNG adoption, mainly among commercial vehicles, with potential government incentives such as tax breaks and subsidies to encourage usage.
Meanwhile, Nigeria’s LPG consumption, which stood at 1.3 million metric tons (MT) in 2024, is rising, but penetration remains low, with only 30% of households utilizing LPG as a primary cooking fuel.
Conclusion
Nigeria’s power and gas sectors remain at a critical juncture, with growth hindered by infrastructural deficits, supply chain inefficiencies, and increasing global competition. While ongoing projects and government initiatives offer hope for improvement, sustained investments, policy reforms, and security enhancements are essential to stabilizing the sector and positioning Nigeria as a competitive energy hub in the global market.
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