Business

Nigeria’s efforts to develop renewable energy have suffered major setbacks, with the stalled Lambar-Rimi wind farm project in Katsina State highlighting the challenges facing the sector. The 10-megawatt project was initiated by the Katsina State Government in 2005 before being taken over by the Federal Government in 2007. In 2010, a French company, Vergnet S.A., was awarded a contract to construct 37 wind turbines within 24 months. Despite several years of work, the project remains incomplete. Government reports described it as about 95 per cent complete in 2017, but the Kano Electricity Distribution Company reported in 2023 that it was only 80 per cent complete. The turbines have since deteriorated and require extensive rehabilitation. In 2025, the Katsina State Government reacquired the facility and announced plans to combine it with a 10-megawatt solar power plant. The state expects the hybrid project to begin operations in the fourth quarter of 2026. The challenges extend beyond Katsina. Several other wind and solar projects across Nigeria have remained undeveloped or have been cancelled, reflecting persistent problems with financing, infrastructure, regulation and project coordination. Experts say Nigeria lacks the systems needed to turn renewable energy plans into viable projects. They identify policy uncertainty, limited access to financing, inadequate wind-resource data, grid constraints and difficulties securing land as major obstacles to investment. They also stress that renewable energy projects require reliable transmission infrastructure, clear power-purchase agreements and credible buyers to ensure investors can recover their costs. Egypt provides a contrasting example, having expanded its renewable energy sector through clearer regulations, competitive bidding, investment support and improvements to electricity transmission infrastructure. Its Benban solar park, which has a combined capacity of 750 megawatts, was connected to the national grid in 2019. Industry stakeholders say Nigeria can adapt some of these approaches while developing solutions suited to its own electricity market, including mini-grids and commercial and industrial renewable energy projects. Local manufacturing is another challenge. Although Nigerian companies can produce or assemble some solar equipment, specialised technologies and key components remain heavily dependent on imports. Manufacturers face high financing costs, foreign-exchange instability, unreliable electricity and uncertainty about demand. The government’s Distributed Access through Renewable Energy Scale-up programme aims to expand electricity access to more than 17.5 million Nigerians through connections and mini-grids. A proposed solar manufacturing facility involving the Rural Electrification Agency, Infrastructure Corporation of Nigeria and Dutch company Solarge BV is also intended to support local production. Industry experts recommend gradually increasing local manufacturing, starting with solar-module assembly, mounting structures, cables and battery packs, while developing domestic capacity for wind-turbine foundations, steel towers, installation and maintenance. They say Nigeria’s renewable energy industry will only grow sustainably if projects are supported by reliable financing, stable regulations, transmission infrastructure, local manufacturing and long-term maintenance plans.

The Federal Government is proposing a petrol price cap of about one thousand, three hundred and fifty naira per litre to reduce the impact of rising fuel costs on Nigerians. The Minister of Finance, Taiwo Oyedele, says the proposal would require fuel importers and local refiners to absorb temporary price increases and recover their losses when costs come down. The move follows a surge in global oil prices linked to tensions in the Middle East, which has pushed petrol prices to record levels. The government is also planning a 30-day fuel discount programme, under which petrol would be sold at cost, with priority given to public transportation. Officials are also considering forward crude oil sales to local refineries to help stabilise feedstock prices and reduce the impact of fluctuations in the international oil market. Oyedele says the government may introduce a windfall tax on energy companies found to be exploiting consumers, with the revenue used to fund transport subsidies and fuel vouchers for low-income urban workers. The proposed measures come as rising fuel prices increase the cost-of-living pressure on President Bola Tinubu’s administration ahead of Nigeria’s 2027 elections.

The Federal Government has announced a new licensing round offering 40 oil blocks across land, shallow water and deepwater areas. The Nigerian Upstream Petroleum Regulatory Commission says the 2026 licensing round is aimed at attracting fresh investment into the country’s oil and gas sector. The Minister of State for Petroleum Resources, Heineken Lokpobiri, says Nigeria’s crude oil and condensate production has increased to 1.82 million barrels per day, up by more than 80 per cent since 2023. The NUPRC also says it has approved 120 oil and gas field development plans since 2024, involving about 47-point-six billion dollars in capital commitments. The commission says the projects could eventually add 1.74 million barrels of oil and 13-point-nine billion standard cubic feet of gas per day to Nigeria’s production capacity. For the new licensing round, bidders will be required to disclose their beneficial owners, while the evaluation process and results will be published in greater detail. The NUPRC says the exercise will prioritise transparency and competitive bidding, with successful investors expected to develop the assets rather than simply hold the licences.

The Nigerian National Petroleum Company Limited, NNPC, recorded a record N7.2 trillion profit after tax in 2025, despite a drop in revenue. The company’s profit rose by 33 per cent from N5.4 trillion in 2024, while revenue fell to N34.5 trillion amid lower crude oil prices and reduced petroleum product sales. NNPC attributed the improved performance to tighter cost control, debt recovery, increased efficiency and stronger financial discipline. Taxes, royalties and other payments to the Federal Government also rose by 39 per cent to N22.3 trillion during the year. The company says it recovered significant debts owed to it, while general and administrative expenses fell by about a quarter. NNPC also plans to increase crude oil production to two million barrels per day by 2027 and three million barrels per day by 2030. The company says it will seek more than 60 billion dollars in investment across the energy value chain to achieve its production targets and strengthen its refineries and gas infrastructure.