Nigeria Needs $228bn to Transform Power Sector

Nigeria will require an estimated $228 billion in electricity investment between now and 2045 to modernise its power sector, strengthen the national grid and meet the country’s growing energy needs. Achieving this goal will depend on sustained investment, supportive policies and stronger collaboration between government and the private sector.

Speaking at Asharami Square 3.0 in Lagos, the Special Adviser to the President on Power Infrastructure, Sadiq Wanka, said Nigeria needs about $12 billion in electricity investment every year through 2045. He noted that the country currently attracts only about $1 billion in annual investment, leaving a significant funding gap.

“Nigeria, potentially, needs $12 billion in electricity investments annually through 2045, versus $1 billion being spent currently,” Wanka said.

He explained that bridging the gap will require coordinated policy reforms, stronger regulations and a disciplined strategy to attract long-term investment. According to him, about $6.1 billion is needed for power generation, $2 billion for transmission infrastructure and between $2 billion and $4 billion for the distribution network during the period.

Despite the funding challenge, Wanka said recent reforms have created a stronger foundation for growth. He highlighted the Electricity Act 2023, which has expanded state participation, strengthened sector governance and introduced new licence categories. Regulatory oversight has also shifted to subnational regulators in 16 states.

He pointed to recent investments, including a $200 million public-private partnership announced by the Imo State Government to provide electricity across all local government areas and a ₦50 billion equity investment by franchise state governments in KEDCO to support embedded generation and network improvements.

Wanka added that the transition to cost-reflective tariffs, particularly for Band A customers, has reduced electricity subsidies by ₦1 trillion annually. He also said the removal of petrol subsidies has improved the competitiveness of alternative power solutions, while reforms in the oil and gas sector have attracted $10 billion in final investment decisions for major gas projects.

To sustain progress, he outlined several ongoing government initiatives, including the Light Up Nigeria pilot project in Agbara to improve electricity supply for industrial users. He also highlighted provisions in the Electricity Act 2023 that allow independent transmission operators and greater private sector participation in transmission financing and operations.

Other initiatives include the Transmission Infrastructure Fund, established in the third quarter of 2025 with full implementation expected by the fourth quarter of 2026. Wanka also said the Federal Ministry of Power is working with the Ministry of Water Resources on a new concession process for viable hydropower assets, while the World Bank-backed Sustainable Power and Irrigation Programme is preparing a hydropower masterplan to support future investments.

He called for the creation of a Power Project Development Fund, stronger financing mechanisms and a dedicated financial institution for the power sector to help close Nigeria’s estimated $23 billion electrification gap by 2030. He also urged investors and development partners to support reforms, attract capital and work together on a coordinated plan to strengthen Nigeria’s power sector.

What additional steps should Nigeria take to attract more private investment into its electricity sector?