Lagos Faces N5.3trn Annual Loss as Power Deficit Strains Eco....

Samuel Mobolaji

Lagos State’s persistent electricity shortfall is imposing a staggering financial burden on residents and businesses, with a new report revealing that the energy gap costs them an additional N5.3 trillion annually.

The Lagos Economic Development Update (LEDU) 2025, published by the Lagos State Government, indicates that while the state requires about 9,000 megawatts (MW) of electricity, it receives only 1,000 MW from the national grid—just 11 per cent of its demand.

Consequently, over 80 per cent of Lagos’ population and businesses depend on expensive off-grid power solutions, mainly petrol, diesel, and fuel oil generators, exacerbating costs and environmental challenges.

The report highlights that off-grid generators in Lagos collectively produce about 15,000 MW daily, but at an unsustainable cost. Power generated from these sources costs approximately N130 per kilowatt-hour (kWh), compared to N50/kWh from the national grid. This sharp price disparity translates into an annual economic loss of N5.3 trillion, eroding disposable incomes, curbing business investments, and stalling economic growth.

Beyond financial losses, Lagos’ overreliance on fuel-powered generators is worsening environmental hazards, leading to excessive carbon emissions, noise pollution, and health risks associated with fossil fuel use. Energy experts warn that if immediate action is not taken to diversify and expand Lagos’ energy sources, the state faces prolonged economic and environmental setbacks.

The LEDU 2025 report projects that Lagos’ electricity demand will surge to 29,212 MW by 2030, driven by rapid urbanisation and economic expansion. However, the state’s ageing infrastructure and inadequate national grid supply remain critical obstacles to meeting this future demand. The report further warns that Lagos’ energy infrastructure is outdated and highly vulnerable to climate-related disruptions such as flooding and extreme weather.

Energy analysts argue that bridging Lagos’ power deficit requires substantial investment in renewable energy, expansion of independent power projects (IPPs), and an overhaul of grid infrastructure to improve reliability and affordability. Regulatory reforms and incentives to attract private sector participation are also seen as essential to closing the electricity gap.

To address the crisis, the Lagos State Government is prioritising strategic partnerships with private investors and international organisations to scale up alternative energy solutions, particularly in solar, wind, and gas-powered electricity generation. The push for renewable energy and enhanced transmission infrastructure is considered crucial to securing a sustainable power supply for Africa’s largest megacity.