Gabriel Obinya
Nigeria’s worsening electricity crisis has sparked a disagreement between the Nigerian Independent System Operator (NISO) and the Nigerian National Petroleum Company Limited (NNPC) over the factors responsible for declining power generation, bringing renewed attention to persistent challenges in the country’s gas-to-power value chain.
The disagreement comes amid growing concerns over unreliable electricity supply, prolonged outages and rising energy costs, with households and businesses bearing the consequences of reduced power availability.
While NISO attributes the decline in electricity generation to inadequate gas supply to thermal power plants and reduced water inflows into hydroelectric reservoirs, NNPC insists that its gas transportation infrastructure remains fully operational, with no constraints preventing the delivery of gas to power stations.
The conflicting positions have raised questions about whether the generation shortfall is caused by insufficient gas production, commercial supply arrangements, transportation challenges or operational limitations at power plants.
In a statement issued on Thursday, NISO said constraints in gas supply to thermal generating stations, alongside reduced hydropower output, had significantly affected electricity generation on the national grid.
According to the system operator, limited gas availability has prevented some thermal power plants from operating at their installed capacities, while reduced water inflows into hydroelectric reservoirs have constrained electricity production from hydropower stations.
It explained that the combined effect of these challenges had reduced the volume of electricity available to distribution companies, forcing adjustments to supply schedules and increased load shedding across their networks.
However, NNPC rejected suggestions that transportation limitations within its infrastructure were responsible for the decline in power generation.
The national oil company said operational records from its subsidiary, NNPC Gas Infrastructure Company Limited (NGIC), indicated that its gas transportation network remained operational, with no identified constraints capable of accounting for the reported reduction in electricity generation.
NNPC also disclosed that Nigeria’s gas production had increased by approximately 10 per cent year-to-date in 2026, attributing the growth to ongoing efforts to implement the Federal Government’s gas development and monetisation agenda.
The company maintained that its transportation infrastructure remained available to support gas deliveries to power-generating stations across the country.
However, increased gas production does not automatically translate into adequate supply to electricity-generating plants, as the process depends on several interconnected stages, including production, processing, commercial agreements, transportation, actual delivery and consumption by power stations.
Consequently, even where production increases and transportation infrastructure remains operational, electricity generation could still be affected by commercial disagreements, outstanding payments, inadequate supply commitments, delivery shortfalls or technical problems at generating stations.
Acknowledging the need to establish the actual causes of the generation shortfall, NNPC said a comprehensive assessment would require an examination of production volumes, commercial supply arrangements, actual gas deliveries, offtake levels and the operational readiness of generating units, including their maintenance schedules.
It therefore called for a coordinated review involving gas suppliers, transportation companies, power generators and NISO to identify the specific challenges affecting electricity generation.
The disagreement has renewed attention on Nigeria’s longstanding struggle to convert its abundant natural gas resources into reliable electricity supply, despite successive government commitments to make gas a major driver of industrialisation and economic development.
Nigeria relies heavily on gas-fired thermal power stations, making consistent and affordable domestic gas supply essential to sustaining electricity generation and maintaining grid stability.
Disruptions at any stage of the gas-to-power value chain can affect generating capacity, electricity allocations to distribution companies and the volume of power ultimately delivered to consumers.
The impact extends beyond the power sector, with households and businesses facing increasing economic pressure from declining electricity supply.
For manufacturers, unreliable grid electricity increases production costs as companies are forced to depend more heavily on petrol and diesel generators to sustain operations, including manufacturing, refrigeration, processing and other energy-intensive activities.
Businesses already contending with high borrowing costs, elevated energy prices and weakening consumer purchasing power could face further pressure on profit margins, production capacity and competitiveness.
Small and medium-sized enterprises are particularly vulnerable because many lack the financial capacity to sustain prolonged dependence on alternative power sources.
The increased reliance on generators also raises operating expenses, costs that businesses may eventually transfer to consumers through higher prices of goods and services.
Households are equally affected, particularly as high temperatures increase demand for electricity-dependent appliances such as fans, air conditioners and refrigerators.
The latest disagreement underscores the need for a comprehensive review of Nigeria’s electricity generation framework, particularly the structural challenges affecting the entire gas-to-power value chain.
Resolving the crisis will require more than increasing gas production or maintaining transportation infrastructure. It will also involve addressing commercial bottlenecks, improving supply agreements, ensuring timely payments, strengthening gas delivery arrangements and resolving technical challenges at generating stations.
NISO said it was working to optimise available generation, maintain grid stability and improve the resilience of the national electricity system. It also acknowledged the difficulties facing electricity consumers and emphasised the importance of diversifying the country’s energy mix to strengthen supply security.
NNPC, on its part, reaffirmed its commitment to expanding gas infrastructure and collaborating with industry stakeholders to ensure that Nigeria’s natural gas resources translate into more dependable electricity supply.
Ultimately, the disagreement between the two institutions highlights the challenges within Nigeria’s power sector, where increased gas production and operational transportation infrastructure do not necessarily guarantee sufficient fuel supply to generating stations.
For electricity consumers, the immediate concern remains ensuring that available gas translates into increased power generation, improved distribution and more reliable electricity supply.
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