Electricity, gas, steam and air-conditioning supply records second straight quarterly contraction as structural challenges weigh on output….
Nigeria’s electricity, gas, steam and air-conditioning supply sector recorded another decline in the second quarter of 2026, contracting by 10.63 per cent in real terms compared with the same period last year.
The latest figure was contained in the Gross Domestic Product (GDP) report released by the National Bureau of Statistics (NBS), highlighting the continued struggles confronting one of the country’s most important economic infrastructure sectors.
Although the Q2 contraction was less severe than the 15.30 per cent decline recorded in the first quarter, the sector remained firmly in negative territory for the second consecutive quarter.
Its performance stood in stark contrast to the wider Nigerian economy, which expanded by 4.43 per cent in real terms during the second quarter of 2026.
According to the NBS, the overall GDP growth rate also represented an improvement over the 4.23 per cent recorded in the corresponding quarter of 2025.
The latest data showed that the sector recorded modest growth when measured in nominal terms, even as its real output continued to contract.
The electricity, gas, steam and air-conditioning supply sector posted nominal year-on-year growth of 0.87 per cent in Q2 2026, significantly lower than the 4.98 per cent recorded in the preceding quarter.
The sector’s nominal value also increased from N324.83 billion in Q1 to N1.26 trillion in Q2.
However, the difference between the nominal figures and real growth performance suggests that the increase in the monetary value of the sector’s output has not translated into an expansion in actual economic activity.
The continued decline in real terms points to lingering weaknesses across the power value chain, despite efforts to improve electricity generation and supply.
Electricity supply remains a major challenge for Nigeria’s productive sectors, with manufacturers, businesses and households still relying heavily on the national grid as well as alternative sources such as diesel- and petrol-powered generators.
The persistent weakness in the sector reflects several long-standing problems within the electricity value chain.
These include limited generation and transmission capacity, constraints in gas supply to power plants, ageing infrastructure and liquidity challenges affecting participants across the electricity market.
For businesses, unreliable power supply often translates into higher operating costs as companies are forced to spend more on alternative sources of electricity.
The situation can also constrain industrial output, reduce productivity and weaken the capacity of businesses to expand, potentially limiting the benefits of growth recorded in other areas of the economy.
The latest figures also represent a reversal from the improvement recorded in the electricity sector in 2025.
Nigeria recorded a 10.92 per cent increase in electricity generation in the first quarter of 2025, with improved availability and operating performance at thermal and hydropower plants supporting the increase.
Thermal power stations accounted for much of the improvement, with 16 of the 23 thermal plants connected to the national grid recording higher average hourly output compared with the previous quarter.
However, the latest GDP figures indicate that the earlier improvement has yet to translate into sustained real growth in the broader electricity, gas, steam and air-conditioning supply sector.
Despite its recent contraction, the sector continues to maintain a significant economic presence.
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.
The latest GDP figures, however, show that challenges within the sector remain unresolved even as Nigeria’s overall economic performance improves.
Nigeria’s economy records stronger growth
The contraction in the power sector came as Nigeria’s wider economy posted stronger growth in Q2 2026.
The country’s real GDP expanded by 4.43 per cent year-on-year during the quarter, compared with 4.23 per cent recorded in Q2 2025.
The performance indicates that growth is continuing across other parts of the economy despite the difficulties confronting the electricity sector.
The World Bank has maintained its 4.4 per cent growth forecast for Nigeria in 2027, while S&P Global Ratings upgraded the country’s long-term foreign and local currency credit ratings to ‘B’ from ‘B-’.
However, the continued contraction in electricity and gas supply highlights the importance of resolving infrastructure and financing challenges in the power sector if Nigeria is to sustain stronger economic growth and improve productivity across businesses and households.
