Nigeria’s Gas-to-Power Ambitions: Limits, Opportunities and Alternatives

Introduction

For decades, Nigeria has articulated ambitious plans to leverage its gas resources to deliver energy access, industrialization, electricity for homes and businesses, transportation and more. Its latest plan—the Decade of Gas initiative, running from 2021 to 2030—reveals similar aims, including around gas-to-power. Despite these efforts, more people without access to electricity live in Nigeria than anywhere else in the world. Tens of millions more endure poor-quality service, with daily power cuts, and rely on costly private generators. Without new power delivery systems, poverty will remain endemic and the economy will continue to struggle.

Nigeria has over 200 trillion cubic feet of gas reserves—Africa’s largest and the eighth largest in the world. However, reserve size alone does not guarantee domestic availability. Converting reserves into commercially producible gas requires substantial investment in gathering systems, processing facilities, transportation infrastructure and security arrangements. Since military rule ended in 1999, successive governments have invested in gas-to-power, rolling out new plans and policies; privatizing plants; and spending billions of dollars on infrastructure, industry bailouts and subsidies. Three-quarters of on-grid power supply now comes from gas, up from less than half in 2000. 

The country’s plans for gas do not stop at electricity, either. Policy-makers and businesses want to: turn gas into heat and feedstock for heavy industries like cement, fertilizer and petrochemicals; replace dirty, dangerous household fuels like kerosene or charcoal with liquified petroleum gas; and earn more revenue from selling liquified natural gas (LNG) as oil exports decline.

Policymaking and investment in the electricity sector are very dynamic right now, especially around renewables. 

After years of slow growth, renewable power—especially small-scale solar—is starting to take off in Nigeria. The federal government is offering various kinds of policy support for minigrids, solar home systems (SHS) as well as commercial and industrial (C&I) installations. Critically, some states are also starting to create their own power markets and delivery systems, as permitted by the 2023 Electricity Act. This decentralization of control over electricity has the promise—if well managed—to ease long-standing barriers to growth in the power sector and find more diverse, reliable and affordable solutions to the many electricity-related struggles Nigerians are facing. Strong coordination with harmonized regulatory standards and state-led investment platforms could enhance the potential for success of this decentralized approach. 

This report assesses the historic performance and prospects for gas power in Nigeria, as well as the potential for renewables to serve as a complement and alternative to gas. It does not advocate for wholly eliminating gas from Nigeria’s energy mix. Rather, it examines whether current gas-to-power ambitions are realistic given the sector constraints. The report explores whether greater emphasis on renewable energy could more effectively advance Nigeria’s electricity access, affordability and development objectives where gas supply, financing and infrastructure remain unattained. 

Findings are based on analysis of relevant data sets and past reports; consultations with industry experts; engagements with civil society actors; and the results of a one-day validation session held by the Natural Resource Governance Institute (NRGI) in Abuja, with partners Nextier and The Electricity Hub. The publication forms part of NRGI’s broader work on gas in Nigeria, which seeks to examine how the country can maximize development benefits from its gas resources while avoiding costly investments that may not deliver expected economic, fiscal or energy outcomes. The aim of this report is to help decision-makers as they shape the future of energy in Nigeria.