Why Is Electricity Spotty And Fuel So Expensive In Africa’s Largest Oil-Producing Nation?

When the street siren sounded outside Mr. Kofi’s tailoring shop in Ikeja, Lagos, it meant only one thing: the grid was back. His team had been sitting in the dark for most of the day. They had run out of generator fuel. Mr. Kofi joked that NEPA — local shorthand for the long-defunct agency that once ran the national grid — must have known a visitor was coming, and that’s why they “brought back the light.” He has been running his tailoring business for 25 years. His shop sits in Band A, Nigeria’s highest-priority electricity zone, promised 20 hours of power a day under the tariff reform introduced in April 2024. The fuel to bridge the gaps now costs around ₦1,300 per liter — up from a national average of ₦1,034 in January, according to the Nigerian Bureau of Statistics.

The proximate cause of the latest spike is a war being fought thousands of kilometres away. Iran’s closure of the Strait of Hormuz in late February sent global crude prices surging. Between April 27 and April 29 alone, Brent crude rose from $105 to $118 per barrel — prompting the Dangote Petroleum Refinery to adjust its petrol loading price from ₦1,200 to ₦1,275 per liter. Pump prices at filling stations across the country followed swiftly. But for most Nigerians the current crisis is less a new emergency than a fresh layer on top of a very old one.

Nigeria extracts approximately 1.4 million barrels of crude oil per day and is Africa’s largest petroleum producer. Yet for decades it has lacked the refining capacity to meet its own fuel needs, importing refined petrol priced against global markets. “Why is the fuel expensive here if we are the ones supplying oil to other countries?” asked Vanessa Aguda, a cosmetic chemist and personal care brand founder based in Lagos. “Those are the little questions I keep asking. It’s not aligning properly for us.”

We’ve been sitting here working in the heat and without light all day

Kofi, owner of a tailoring shop in Lagos

The explanation lies in decades of refinery neglect. Nigeria’s four state-owned refineries — in Port Harcourt, Warri and Kaduna — have operated far below capacity for years, crippled by underinvestment and mismanagement. For most of the past decade, the country processed virtually none of its own crude, exporting it raw and importing refined petrol at international prices — a cycle that left consumers exposed to every fluctuation in global oil markets. The long-awaited Dangote refinery, which began petrol production in 2024 and has ramped up significantly since, was supposed to break this dependency. But while it has increased domestic supply, its pricing remains anchored to global crude benchmarks. “Nigerian authorities, since the liberalization policy came on board, have adopted global pricing,” explained Paul Alaje, an independent economist based between Lagos and Abuja. “So whatever the global oil trade is, the price Nigerians pay — even in naira — is still set at the global rate.”

The dysfunction isn’t limited to gas pumps. For years, Nigeria had subsidized electricity at a huge cost. The International Monetary Fund estimated in May 2024 that combined fuel and electricity subsidies were on track to consume 3% of the country’s GDP that year, describing them as “costly and mistargeted, with higher-income groups benefiting more than the most vulnerable.” The new system created five customer tiers: Band A customers are entitled to a minimum of 20 hours per day; Band B, a minimum of 16; Band C, 12; Band D, eight; and Band E, just four. Those who pay more receive more.

Band electricity

In practice, the grid has not cooperated. Uzoma Okey-Ibiam, a civil servant in Abuja, was classified as Band B in her previous neighbourhood of Gaduwa and was supposed to receive at least 16 hours a day. In reality, it was about 12 on average. In Ibadan, Kelvin Oritsetimeyin, a freelance software engineer also in Band B, described having had roughly an hour of grid electricity across an entire two-week period in April. “We could be in Band Z for all I know. It’s terrible,” he joked. “Today is an exception where we’ve had six hours of light. We’ve not had this much in three months.”

Nigerian authorities, since the liberalization policy came on board, have adopted global pricing

Paul Alaje, economist

Even those averages obscure the reality of supply, which rarely arrives in continuous blocks. Power often comes in bursts — an hour on, several hours off, sometimes minutes at a time. “The power can go on and off about 20 times in a week,” Oritsetimeyin said. In Lagos, Aguda said that the only electricity she’d gotten that day came at about 3 a.m. and “lasted for no more than 15 minutes.”

These experiences reflect a broader pattern. The average grid-connected Nigerian household receives only 6.6 hours of supply on a typical day and consumes just 144 kilowatt hours of electricity per year — compared to 351 in Ghana and 4,198 in South Africa. The problem, analysts say, is not simply uneven distribution but a system that often fails altogether. “When the national grid collapses, both Band A and Band D are in zero output,” said Alaje. “It really does not matter anymore because power cannot be transmitted.”

The Nigeria that has emerged from decades of this failure is one that has privatized its own power infrastructure, household by household. Aguda runs her home on solar but her cosmetics manufacturing business on a generator costing around ₦150,000 a month in fuel, on top of ₦48,000 to ₦50,000 in grid electricity charges. “Everything comes up to 200 and something thousand naira every month on electricity alone,” she said. “For a small business here, that expense is quite high.”

When costs force price increases, the competitive consequences are immediate. “When we increase the price of our products, our competitors tend to get more clients. People who were our expected customers move over, because it’s cheaper.” She has watched other manufacturers in her sector go to China or South Korea to produce goods and import them back — not because Nigerian craftsmanship is inferior, but because keeping the lights on in a Nigerian factory makes local production cost-prohibitive. Aguda has considered following suit, but for now is committed to producing locally in line with her brand ethos. “We want to make sure that we are aiming for Nigerian-manufactured products for people of color”, she explained.

For smaller businesses, the margin is thinner still. Tailors, hairdressers and other micro-enterprises operate on narrow daily income, with little buffer when costs rise. “We’ve been sitting here working in the heat and without light all day,” said Mr Kofi on the latest power cut. “I have a generator, but it’s empty. At ₦1,300 a liter, I can’t afford to run it right now.” Economists describe this as a shutdown point — the moment when the cost of operating exceeds what a business can earn. “When small businesses cannot cover their average variable costs, they will have to shut down if those costs continue to grow and revenue is not growing with it,” said Alaje. Mr. Kofi, in Band A, is already past that point on some days.

For those with capital, solar power has become the rational exit. In February, Oritsetimeyin bought a ₦400,000 portable solar station that can run his household of three for 10 hours a day. He subsequently ditched his fuel-guzzling generator, which needed 12-20 litres of petrol per week to run for about four hours a day during work hours.

Meanwhile, Okey-Ibiam spent around ₦5 million on a full inverter system and has been living entirely off-grid since moving to Lugbe in September 2025. “Solar is supposed to be an alternative for the grid. But no, the grid is going to be an alternative for my solar,” she said. “Since I installed it, I don’t think about light anymore,” Uzoma said.

But this stability comes at a cost few can afford. “Minimum wage in Nigeria is about 35 pounds a month,” Alaje said. “How do you think people living on one pound a day can afford to buy solar panels?”

Alaje has been urging the government since February to cap domestic prices at pre-war levels. “If this is done, the impact of global shocks, whether now or in the near future, will be very minimal on our economy.” The government has not acted.

For Aguda, the waiting has a limit. “If by next year nothing gets better, we’ll start looking at moving manufacturing to China or Korea. And as a resident of this country, if things do not get better on time, I will really start thinking of relocating.” She paused. “That would mean starting afresh, starting life a new way, doing something I have never done before.”

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