No doubt Nigeria is celebrating a greater success in policy shift especially in the energy sector after the Federal Government initiated bold reforms aimed at improving the energy sector.
Though, the Petroleum Industry Act (PIA) has supported most key steps in the direction of promoting efficiency and transparency in the industry and attracting investment, however, this has not translated into significant changes as expected.
Nonetheless, there is evidence that oil production has improved and multinational companies energised by policies to boost the sector which have trumpeted new deepwater investments.
In addition indigenous firms are getting involved too, taking over onshore assets in the Niger Delta with plans to tap long-abandoned wells.
Two years in the life of the present administration the expected gains from President Bola Ahmed Tinubu’s subsidy removal on petrol as announced on his inauguration on May 29, 2023, is yet to address key industry challenges, like oil theft, smuggling of products among others.
The understanding are that the fuel subsidy removal would free up financial resources for other sectors, incentivise domestic refineries for more petroleum products, and reduce dependency on imported fuel and channel funds for development of critical projects.
Currently government owned refineries are not performing optimally except Dangote’s mega refinery which is standing in the gap.
However, Nigerians are yet to reap the benefits of the fuel subsidy removal, as they currently face hardship, sufferings and economic downturn due to the removal.
Fuel is being sold at exorbitant rate by marketers because of the high cost of refining the crude outside the country, as Nigerians earnestly await oil production by public owned refineries.
The coming on stream of the $20 billion Dangote Refinery with a refining capacity of 650,000 barrels per day (bpd) in the third quarter of 2023 was a plus to the country’s oil sector.
Though the company has commenced pumping refined Automotive Gas Oil (Diesel) and aviation fuel or Jet A1 supply of fuel to bridge the gap and cushion the inadequacy in the sector has not yet reached its planned peak.
Though presently, the sector has witnessed some landmark achievements.
The Federal Government had on December 21, 2023, announced the mechanical completion and flare start-up of the Port Harcourt Refining Company Limited (PHRC), but just recently the refinery has been shut down for maintenance.
Major oil companies are divesting their assets though giving opportunities to indigenous companies to provide buffer for supply of crude to boost production.
For a long period of time, the Country has not been able to pump to its OPEC quota for years.
Minister of state for petroleum (Gas), Ekperikpe Ekpo, speaking at the 5th Nigerian Oil and Gas Opportunity Fair (NOGOF) in Yenagoa, Bayelsa State, last week notes that Nigeria’s crude oil production averaged 1.4 million barrels per day (bpd) in the first quarter of the year, well below the 1.8 million bpd quota in OPEC.
Equally speaking in that direction, Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), noted that.
“Production growth hinges on optimising our existing resources and exploring new frontiers,”.
Oil theft and pipeline vandalism have long plagued Nigeria’s upstream oil and gas industry, driving majors out of Nigeria and often resulting in force majeure at the key crude oil export terminals.
Nigeria, has consistently failed to pump to its OPEC+ quota due to oil theft and vandalism and struggles to launch new projects.
Meanwhile, authorities have been clamping down on oil theft and have been supportive of an increase in oil and gas output in recent months.
The NUPRC said earlier in May that U.S. supermajor ExxonMobil plans to invest as much $1.5 billion in deepwater oil and gas exploration and development offshore Nigeria.
On the positive side, under the current administration, Nigeria has achieved major milestones in the energy sector, including securing three of Africa’s four Final Investment Decisions (FIDs) valued at over $5.5 billion and commencing petroleum production at Africa’s largest refinery – the Dangote Refinery.
On the back of these milestones, Nigeria’s energy reforms and growing capacity are not only booting national development but also strengthening regional energy security, supporting intra-African trade and laying the groundwork for sustainable job creation and economic diversification.
As one of Africa’s biggest oil and gas producers, Nigeria seeks to incentivize greater spending across the hydrocarbon industry.
Energy major ExxonMobil recently announced it will invest $1.5 billion in revitalising its Usan deepwater oilfield on offshore block OML 138 in Nigeria, with FID expected by Q3, 2025.
The investment, spanning 2025 to 2027, aligns with Nigeria’s production target of 2.5 million barrels per day by year-end and falls under the Nigerian Upstream Petroleum Regulatory Commission’s Project 1 Million Barrels initiative. Meanwhile, in 2024, the country’s energy sector attracted $6.7 billion in investments in 2024, with $5.5 billion directed toward oil and gas asset acquisitions – including major deals by Seplat, Chappal Energies and Oando – and an additional $1.1 billion allocated to the Presidential Metering Initiative and clean energy programs.
The government also secured landmark investments such as Shell subsidiary SNEPCo’s $5 billion Conga North project and a $550 million non-associated gas project by TotalEnergies and the Nigerian National Petroleum Company. These developments, driven by strategic reforms and tax incentives, underscore Nigeria’s ambition to unlock $30 billion in oil and $5 billion in gas investments by 2029, positioning the country as a key driver of Africa’s energy transition and industrial growth.
In the downstream sector, the UAE recently joined a group of international financiers backing the estimated $25-billion Nigeria-Morocco gas pipeline project, which aims to transport natural gas from Nigeria to Europe via 5,660-km route crossing 15 African countries.
With support from partners including the European Investment Bank, Islamic Development Bank and OPEC Fund, and a new joint venture formed between Morocco and Nigeria to manage the project, the initiative marks a major milestone in African energy infrastructure.
As the country continues to attract substantial investments, it stands ready to bolster production capacity and exports.
“Nigeria’s bold reforms, rising investment flows and growing leadership in regional energy cooperation – particularly with landmark projects like the Nigeria-Morocco gas pipeline – demonstrate its pivotal role in Africa’s energy future.
The country’s recent achievements and future vision inspire collaboration and deal-making, thereby accelerating the continent’s path to energy security and industrialisation,” stated Tomás C. Gerbasio, Strategy and Business Development Director of the African Energy Chamber.
The power sector has steadily been plagued by poor investments, insufficient gas supply, and weak infrastructure, which have led to incessant blackouts recorded from time to time.
The national grid has collapsed 11th collapse in 2024, affecting both business activities and livelihoods.
The federal government has attributed the repeated grid collapses to several factors, including aged and aging facilities, lack of maintenance and poor investment, as well as sabotage.
The Nigerian power sector faces significant challenges, primarily due to insufficient investment, weak infrastructure, and a lack of maintenance, leading to frequent blackouts and grid collapses. This issue is exacerbated by factors like inadequate gas supply, legacy debts within the sector, and the need for modernisation of aging equipment.
The power sector in Nigeria has historically lacked sufficient investment, leading to a decline in infrastructure and a failure to keep pace with growing electricity demand.
A significant portion of the existing infrastructure is obsolete and in need of replacement or upgrading, making it prone to breakdowns and failures, while poor maintenance practices contribute to the deterioration of power infrastructure and increase the risk of grid collapses.
The power sector heavily relies on gas for electricity generation, and disruptions in gas supply can lead to reduced power output and outages.
These problems were recently highlighted by the Niger Delta Power Holding Company (NDPHC) Limited on concerns over the dismal uptake of electricity from the electricity market which is significantly weighing down its operations.
Managing Director of NDPHC, Engr. Jennifer Adighije, explained that gas supply challenges, transmission constraints as well as close to N600 billion debt being owed the company by Nigeria Bulk Electricity Trading (NBET) and other bilateral entities are hindering the company’s operations.
She disclosed that the new management has worked assiduously to resuscitated five turbine units across Calabar, Omotosho, Sapele, Ihovbor plants that were erstwhile offline, which now contribute additional 625MW megawatts to the national grid.
The NDPHC currently has mechanically available generation capacity of about 2,000MW that is significantly stranded due to transmission constraints, gas supply and gas transportation limitations in addition to dwindling offtake by the distribution companies (DisCos).
Over the years, the NIPP plants are utilized by the system operator to carry out primary frequency response enabling power grid stability. These ancillary services ought to be monetized in line with the grid code and industry regulations. However, NIPP plants are ordered to startup and shut down at the prerogative of the system operator without any form of compensation thus leading to low utilization of capacity and operational stress on the generating turbine units.
“As you know, in accordance with the grid code, we are placed on restrictions for a number of reasons, from inadequate transmission grid availability – although this is being seriously addressed by the Honourable Hinister of Power, Chief Bayo Adelabu- to low demand from the downstream electricity market. It is important to note that power generation is driven by demand, and therefore, if the demand isn’t made, the plants will not generate. In certain cases when the demand arises, there is inadequate dispatch corridor or wheeling capacity through the grid network.
“In spite of these limitations, NDPHC continues to spearhead transmission grid expansion plan and distribution network interventions to enable power generation to be delivered to the last mile underserved communities” she stressed.
Since inception of NIPP, NDPHC has invested over 500 Billion Naira in Transmission projects – Transformers, Transmission Sub-stations, switch gears, switch yards, transmission lines, line bay extensions and several world-class projects currently being operated by the TCN.
On Alaoji Power Plant, Adighije noted that dispute over gas supply metering with the gas supplier led to the shut down of the station but that it will become functional again before the end of this year as significant steps have been taken to restore the Gas Metering Station (GMS) to provide a lasting solution to gas losses to the plant.
She stated that the company had severally made attempts to enter into a Power Purchase Agreement (PPA) with the Nigerian Bulk Electricity Trading (NBET) to no avail, which would have improved NDPHC’s merit order in the dispatch priority schedule. This has impacted the company very negatively financially and further exacerbates the stranded capacity of the company.
“Currently, NDPHC is placed in the least priority bucket for dispatch in spite of its available daily dispatch capacity of about 2,000MW.
“By no small measure, NDPHC remains the largest fleet of generating turbine units in the sector, conversely, much of that capacity remains stranded due to these impediments that constrain the company from generating optimally.”
Adighije said the company was leveraging on the Order issued by the Nigerian Electricity Regulatory Commission (NERC), on bilateral agreements to sell its stranded power and should soon conclude some deals with off-takers.
Engr. Adighije, explained that the company currently has a generation capacity in excess of demand from the National Grid, and is thus prioritizing direct supply to bilateral and eligible customers to commercialise its stranded capacity.
She also reiterated that the strategy of the new management seeks to unlock that stranded energy by dedicating significant portions of it now to eligible customers and bilateral trading arrangements pursuant to the July 25th order of the NERC directing generation companies now to trade bilaterally with eligible customers and that should be able to address our stranded capacity”.
NATIONAL ECONOMY reports that outstanding debts within the sector, particularly among Distribution Companies (DisCos), hinder their ability to invest in infrastructure improvements and maintenance.
Experts say the power sector needs to modernize its equipment and adopt new technologies to improve efficiency and reliability.
Also, unstable policy environments and a lack of transparency can deter investors from committing to the sector while corruption and bureaucratic inefficiencies can further hinder investment and development in the power sector.
However, the present administration has done more in the energy transition space.
Driving energy transition through Compressed Natural Gas (CNG) involves converting vehicles to run on clean fuel to reduce reliance on traditional fuels like petrol and diesel, promoting sustainability and cost savings.
The CNG offers a cleaner, more affordable alternative that can also alleviate fuel shortages and the CNG produces significantly less carbon dioxide emissions compared to diesel and gasoline, helping to mitigate greenhouse gas emissions and improve air quality, ultimately benefiting public health.
The CNG is a more affordable fuel option than petrol and diesel, leading to cost savings for consumers and businesses.
Nigeria’s abundant natural gas reserves can ensure energy security and reduce reliance on imported refined petroleum products and the CNG can act as a transitional fuel while infrastructure for electric vehicles and renewable energy sources are developed.
To make it succeed government has offered tax breaks, subsidies, and other incentives to encourage the adoption of CNG vehicles.
However, some of the challenges include the cost of conversion, lack of refilling infrastructure, and a need for a clear legal framework according to Mondaq.
Addressing these challenges through government support, infrastructure development, and public awareness campaigns is essential for a smooth transition.
Developing public transportation options like rail lines and buses can further reduce reliance on individual vehicles.
The CNG can also be used for power generation, industrial applications, and even residential heating and cooking, making it a versatile energy source.
President Tinubu’s government is actively promoting a transition towards solar energy through various government initiatives, policies, and programs aimed at increasing access to renewable energy and reducing the country’s reliance on fossil fuels. The focus is on both grid-connected and off-grid solar solutions, particularly in rural areas, to achieve universal energy access by 2030.
The Nigerian Energy Transition Plan, launched in August 2022, outlines a path towards net-zero emissions by 2060, with a significant role for renewable energy.
With huge backing of the government the Rural Electrification Agency (REA) plays a crucial role in promoting off-grid solar solutions, particularly through its Nigeria Electrification Project (NEP), which focuses on reaching hard-to-reach areas.
Impressed by these reforms the African Centre for Energy Governance and Accountability, ACEGA, has praised President Bola Tinubu for what it described as groundbreaking and well-coordinated reforms in Nigeria’s oil and gas regulatory framework.
The group said the Tinubu administration’s support for the effective implementation of the Petroleum Industry Act (PIA) and its deliberate push to increase crude oil production are signs of genuine transformation in the energy sector.
The group’s Executive Director, Dr. Usman Bello Idris, said Tinubu’s approach to reform has restored investor confidence, revived production targets, and positioned Nigeria as a more responsible and efficient oil-producing nation.
“For years, Nigeria’s oil and gas sector groaned under inefficiency, uncertainty, and dwindling output. But what we are seeing today under President Tinubu’s leadership is a bold reset — one that respects the sanctity of the Petroleum Industry Act while pushing for real, measurable growth,” Dr. Idris said.
One of the most visible outcomes of the reforms, ACEGA said, is the steady increase in Nigeria’s crude oil production.
Since mid-2023, the country has seen a gradual climb in output levels, breaching 1.7 million barrels per day in recent months — a marked improvement from the lows of 2022 when output plunged below 1.2 million barrels due to theft, vandalism, and poor infrastructure.
Dr. Idris noted that this uptick did not happen by chance but was the result of deliberate interventions supported by Tinubu, including the relaunch of dormant assets, improved metering systems, and coordinated security efforts around critical pipelines.
“Nigeria’s crude oil production had been on life support, but through strategic regulatory leadership and presidential backing, the situation is reversing. Fields are coming back online, theft is being checked, and operators are regaining the confidence to produce,” he said.
ACEGA particularly hailed the president’s strong commitment to implementing the Petroleum Industry Act (PIA), signed into law in 2021.
The group noted that Tinubu’s government did not just inherit the legislation; it has gone further to empower the relevant agencies, notably the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), to deliver on its promises.
“We must commend President Tinubu for not sidelining the PIA or paying lip service to its provisions. Instead, he has supported a robust implementation strategy that is already yielding results in licensing, fiscal discipline, community development, and investor clarity,” Dr. Idris stated.
The PIA, which took nearly two decades to become law, was designed to overhaul Nigeria’s oil and gas governance by introducing a transparent fiscal framework, separating regulatory responsibilities, and ensuring that host communities benefit from oil proceeds.
“From the Host Communities Development Trust to new fiscal incentives for marginal fields, and clearer guidelines for environmental compliance, the PIA under this administration is not just a document — it is a living, working tool of reform,” Idris added.
The group also applauded the leadership of Engr. Gbenga Komolafe at the NUPRC noting that his commitment to professionalism and transparency has contributed immensely to the success of the reforms.
It cited the commission’s efforts in reducing production costs, introducing real-time production monitoring, and facilitating a transparent bidding process for oil blocks as exemplary.
“The president has given NUPRC room to work, and they are proving that competent leadership can deliver results. NUPRC’s moves to enforce better metering, clamp down on theft, and promote decarbonisation reflect a forward-thinking agenda aligned with global standards,” ACEGA said.
While commending the gains so far, ACEGA urged the Tinubu administration not to rest on its laurels.
The group said there is a need for deeper investment in energy infrastructure, faster resolution of legacy disputes, and strategic planning for Nigeria’s energy transition in the face of global decarbonisation targets.
“The work is not done yet. Nigeria still faces challenges in refining capacity, gas monetisation, and energy access for its people. But what this administration has shown is that with political will, the sector can be revived. The future of oil and gas in Nigeria can be cleaner, more transparent, and more rewarding for all stakeholders,” Dr. Idris said.
ACEGA concluded by calling on stakeholders in the oil and gas industry — from international oil companies to local investors and host communities — to support the government’s reforms and work collectively to secure Nigeria’s energy future
