Nigeria’s electricity, gas, steam and air-conditioning supply sector contracted by 10.63 per cent year-on-year in real terms in the second quarter of 2026, marking its second consecutive quarterly decline.
The latest figure is contained in the Gross Domestic Product (GDP) report released by the National Bureau of Statistics (NBS).
Although the contraction moderated from the 15.30 per cent decline recorded in the first quarter, the sector’s performance highlights persistent challenges confronting one of the economy’s most critical infrastructure segments.
The decline also contrasts with the broader Nigerian economy, which expanded by 4.43 per cent in real terms in Q2 2026, compared with 4.23 per cent recorded in the corresponding quarter of 2025.
According to the NBS data, the sector recorded marginal nominal growth of 0.87 per cent year-on-year in Q2 2026, significantly lower than the 4.98 per cent growth recorded in Q1.
Its nominal value, however, increased sharply from N324.83 billion in the first quarter to N1.26 trillion in the second quarter.
The disparity between the sector’s nominal value and real output indicates that the increase in monetary value has not translated into stronger underlying economic activity.
The continued contraction points to persistent structural weaknesses across Nigeria’s electricity value chain, including inadequate generation and transmission capacity, gas supply constraints, ageing infrastructure and liquidity challenges affecting market participants.
Electricity shortages have continued to increase operating costs for manufacturers and businesses, many of which rely on diesel- and petrol-powered generators to supplement unreliable grid supply.
The challenges also affect household energy access and industrial productivity, potentially limiting economic growth despite stronger performances recorded in other sectors.
The latest GDP figures further suggest that improvements in electricity generation recorded in 2025 have yet to translate into sustained real growth in the broader electricity and gas supply sector.
In Q1 2025, electricity generation increased by 10.92 per cent, supported largely by improved availability and operating performance of thermal and hydropower plants.
Thermal power plants accounted for much of the increase, with 16 of the 23 thermal plants connected to the national grid recording higher average hourly output compared with the preceding quarter.
Despite the sector’s recent contraction, its economic significance remains substantial. The electricity, gas, steam and air-conditioning supply sector generated N62.12 billion in Company Income Tax in 2025, underscoring its contribution to government revenue and the wider economy.
Boluwatife Enome
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