Nigeria’s oil and gas sector is a resource giant that perpetually promises more than it delivers. It is weighed down by fiscal uncertainty, regulatory drag, and international operators who have redirected capital elsewhere, while the country’s reserves sit undeveloped. However, 2026 appears to be the year to revise this assessment; at least on the hydrocarbons side.
Something has shifted there since 2023; nonetheless, on closer inspection of what is happening in Nigeria’s power sector proper, two verdicts appear, and the gap between them is the compass for Nigeria’s energy sector.
President Bola Ahmed Tinubu’s administration has spent its time in office getting things done. They have implemented the Petroleum Industry Act (not just signed it), strengthened regulatory efficiency, and pursued executive actions aimed squarely at unlocking upstream investment.
The Nigerian National Petroleum Company (NNPC) has been steered away from its old identity as a bureaucratic gatekeeper toward a more commercial role, with an emphasis on expanding joint ventures rather than simply administering them.
What we are seeing in oil and gas now looks like confidence, in the form of capital (that could have gone anywhere) choosing Nigeria’s geology instead. Let’s unpack this.
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Deepwater dollars are back
The most unmistakable evidence is offshore. ExxonMobil and its partners are committing $1 billion to the Usan Infill Project, targeting roughly 40,000 barrels per day of additional production — not a speculative wild card, but a disciplined bet on the resource Nigeria already has in the water.
Shell, meanwhile, is deepening its own commitment through Bonga North, expected to deliver up to 110,000 barrels of oil per day at peak, and the HI gas development, designed to supply 350 million standard cubic feet of gas per day to Nigeria LNG.
These are the decisions of operators who believe that the economics and the politics now work in their favour.
The Nigeria LNG Train 7 expansion, alongside efforts to shore up domestic gas supply infrastructure, is the type of investment that builds energy security rather than merely announcing it.
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An exciting development is the emergence of indigenous-led gas projects. This includes UTM Offshore’s 15-year gas supply agreement with the NNPC–Seplat Energy joint venture, which will draw 200 million standard cubic feet per day from the Yoho field to feed Nigeria’s first indigenous floating LNG project.
This signals that Nigerian capital is actively underwriting the reform cycle.
Add the Dangote Petroleum Refinery’s ramp-up toward its 650,000 barrel-per-day capacity, and you have a downstream sector finally correcting one of Nigeria’s weaker, more expensive habits of exporting crude and importing the refined products made from it.
Hydrocarbon market aside, what about the electricity?
All of that is genuine progress, but none of it keeps a single light on in a Lagos apartment or powers a cold-storage facility in a farming community in Kebbi. And this is where Nigeria’s energy narrative falls short.
The power sector — the part of the value chain closest to ordinary Nigerians and to the industrial base the country needs — is telling a far less triumphant story than the one upstream.
Power Minister Joseph Tegbe wants Nigeria to generate and wheel 6,000MW before December 2026, alongside the commissioning of 20 transmission projects.
Current generation sits at roughly 5,000MW, despite the Transmission Company of Nigeria (TCN) saying it already has close to 8,500MW, even 8,700MW by its own more recent figure, of wheeling capacity sitting idle, waiting for generation that isn’t showing up.
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TCN has, understandably, pushed back hard against the “stranded power” narrative that has followed the sector for years, insisting the highest volume ever actually delivered to the grid was about 5,802MW and that generation constraints, not transmission bottlenecks, are the binding limit.
It is a persuasive assertion, but also somewhat moot point — a grid with thousands of idle megawatts of capacity is not a grid Nigerians experience as functional, whoever is technically to blame.
Even with the national grid receiving an additional 600MW in May following the completion of a major transmission infrastructure project in Edo State, it is a rounding error against the scale of what is needed.
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The money still isn’t there
The Presidency estimates that the country’s electricity sector needs roughly $12 billion a year to operate optimally across generation, transmission and distribution. It currently attracts about $1 billion.
The government has at least started paying down what it owes — ₦333.12 billion settled with eight GenCos across 17 plants in the second phase of the Presidential Power Sector Financial Reforms Programme, on top of roughly ₦501 billion in the first phase.
Improving GenCo liquidity matters, as it helps stabilise a system that private capital has, for years, correctly judged too risky to bet on at anything like the scale required.
Also, the Nigerian Electricity Regulatory Commission’s (NERC) shift toward a more decentralised market, with states taking on greater regulatory responsibility, should in theory produce tariff decisions and dispute resolution that respond faster to local conditions than a single national regulator managing a country of over 200 million people ever could.
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The new Net Billing Regulations, in effect since June, finally give rooftop solar and distributed generation customers a credible framework for exporting excess power back to the grid — exactly the kind of regulatory plumbing that distributed energy has needed for years.
And DisCos collecting ₦801.16 billion between January and April, up 6% year-on-year on the back of better metering, is the kind of operational improvement that underpins a healthier market.
Who actually feels this?
Set against all of that, 86.8 million Nigerians, nearly half the population, still have no access to electricity at all, and more than 120,000 farming communities are without reliable power — a fact that warrants discussion as a food security crisis, not merely an energy one.
More than 60% of manufacturing firms have reportedly exited the national grid entirely, choosing self-generation over a connection they cannot rely on. And Nigeria’s push into electric vehicles has seen nearly 4,000 EVs granted tax exemptions in the first half of 2026. However, this is colliding head-on with a meagre electricity supply reported at only around 4,000MW and charging infrastructure that barely exists.
To be successful, Nigeria’s reform agenda must give equal weight to the part that delivers electricity to homes, farms and factories.
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