Nigeria loses an estimated $26 billion each year due to power failures, according to the latest Africa Trade Barometer report, which notes that this figure excludes spending on off-grid generators.
“Economic losses from Nigeria’s electricity shortages are estimated at USD 26 billion annually, not including an additional USD 22 billion spent on fuel for off-grid generators,” the report by Standard Bank states.
Businesses in Nigeria spend about $22 billion annually on off-grid fuel to mitigate the effects of power shortages, which further drives up operational costs.
“In Nigeria, surveyed businesses must contend with a national grid that frequently collapses and fails to meet a daily peak demand that is nearly four times its generation capacity,” the report explains.
The report highlights that power supply is a significant obstacle for businesses across Nigeria and the African continent.
“Across the 10 African markets surveyed, power infrastructure is the most severe barrier to business operations,” Standard Bank reports.
“Blackouts cause production downtimes, risk the quality of temperature-sensitive goods, impact water supply, and disrupt telecommunications, which businesses often rely on for payments. This leads to reduced sales and income.”
The report emerges amidst recent national grid collapses, with blackouts affecting many areas following three collapses in seven days.
According to the National Electricity Regulatory Commission (NERC), the latest outage was due to a transformer explosion at the Jebba transmission station.
“Initial reports on today’s grid disturbance indicate the outage was triggered by a transformer explosion at Jebba transmission station at 08:15, causing a cascade of power plant shutdowns,” NERC reported.
In response, the House of Representatives has announced plans to investigate the recurring national grid failures.