Nigeria Seeks $2 Billion Chinese Loan to Build Super Grid and End Chronic Power Shortages
Nigeria is negotiating a $2 billion loan from China’s Export-Import Bank to finance the construction of a new “super grid” aimed at tackling decades-long power shortages that have hindered economic growth. The initiative, announced by Nigeria’s Minister of Power, Adebayo Adelabu, at an economic summit in Abuja on Monday, is part of a broader plan to decentralize power generation and attract industrial consumers back to the national grid.
The proposed super grid will link the eastern and western regions of Nigeria, which house most of the country’s industrial hubs. “This project is designed to restore confidence in Nigeria’s power sector and ensure heavy commercial users return to the grid,” Adelabu said. Talks with China Eximbank are reportedly progressing, reflecting the government’s urgency to address long-standing energy challenges.
Nigeria’s electricity supply struggles stem from a mismatch between generation and distribution. While the country generates around 13 gigawatts of power, the central grid can distribute only about a third of this to more than 200 million citizens. Frequent outages have forced many businesses to rely on self-generated electricity, accounting for nearly half of the nation’s total power consumption. The new super grid is expected to channel more electricity directly to industrial zones, reducing dependence on costly private generation.
The loan request comes amid a series of economic reforms under President Bola Tinubu’s administration, including the removal of fuel subsidies, tax overhauls, and increased crude oil output through enhanced security in production regions. These reforms aim to strengthen government finances and encourage private sector growth, with the power sector playing a critical role. Cabinet approval for the financing of the super grid has already been secured, signaling strong political backing for the project.
Adelabu highlighted the financial turnaround in the power sector, noting that tariff adjustments for urban consumers in 2024 led to a 70% rise in revenues for power firms, projected to reach 2.4 trillion naira ($1.6 billion) this year. By securing the Chinese loan and expanding the national grid, Nigeria hopes to provide reliable power for its industrial zones, support economic growth, and reduce the reliance of businesses on self-generated electricity.
source: Business day