Nigeria's Energy Infrastructure Faces $15bn Investment Gap as Gas Decade Ambitions Stall
Industry executives warn Nigeria's declared 'Decade of Gas' requires immediate upstream capital deployment, while state-owned Niger Delta Power Holding Company advances risk mitigation protocols at thermal facilities amid chronic generation shortfalls.
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Nigeria's energy sector confronts a critical financing bottleneck that threatens to derail the government's gas-led industrialisation strategy, as infrastructure deficits and delayed upstream investment compound existing generation capacity constraints across Africa's largest economy.
Speaking at the Nigeria International Energy Summit (NIES) in February 2026, Oilserv Group Chief Executive Emeka Okwuosa emphasised that the administration's proclaimed 'Decade of Gas' initiative cannot materialise without substantial capital allocation to upstream production infrastructure. The warning comes as Nigeria's gas utilisation rate remains below 40 percent despite holding Africa's largest proven reserves at 209.5 trillion cubic feet, according to Organisation of Petroleum Exporting Countries data.
"The urgency required to facilitate utilisation of our gas resources demands decisive investment in upstream infrastructure," Okwuosa stated at the Lagos conference, where industry stakeholders highlighted persistent financing gaps estimated between $12 billion and $15 billion annually. Nigeria currently produces approximately 7.5 billion cubic feet of gas daily, with roughly 60 percent flared or re-injected due to inadequate gathering and processing facilities.
The investment imperative extends beyond upstream development to power generation assets, where operational risk management has emerged as a priority for state-controlled entities. Niger Delta Power Holding Company (NDPHC) completed the second phase of its 2026 Insurance Risk Engineering Survey at the Omotosho and Sapele thermal power plants in February, according to Business Day reporting. The assessments form part of broader efforts to secure commercial insurance coverage for generation facilities that contribute approximately 1,200 megawatts to the national grid.
NDPHC's risk mitigation programme addresses persistent underinsurance across Nigeria's 13,000-megawatt installed generation capacity, of which only 4,500 megawatts reaches operational availability during peak demand periods. The Omotosho facility in Ondo State operates three gas turbines with 335-megawatt combined capacity, while the Sapele plant in Delta State maintains 450 megawatts across five generating units. Both installations have experienced repeated outages linked to gas supply interruptions and equipment degradation.
The convergence of upstream investment deficits and generation infrastructure challenges reflects systemic financing constraints that have characterised Nigeria's energy sector since market liberalisation commenced in 2013. Commercial banks have reduced power sector exposure from ₦1.2 trillion ($780 million) in 2020 to approximately ₦850 billion ($550 million) in 2025, citing non-performing loan ratios exceeding 35 percent in the sector, according to Central Bank of Nigeria financial stability reports.
International development finance institutions have partially filled the funding vacuum, with the African Development Bank committing $410 million to gas infrastructure projects in 2024-2025 and the World Bank approving $750 million for transmission network rehabilitation. However, these interventions address less than 15 percent of estimated capital requirements through 2030, when Nigeria targets 30,000 megawatts of generation capacity to support projected GDP growth of 5-6 percent annually.
The gas monetisation challenge carries particular significance for fiscal planning, as petroleum revenues contribute approximately 50 percent of federal government income despite oil production declining to 1.25 million barrels daily in January 2026 from peak output of 2.5 million barrels in 2005. Expanding domestic gas utilisation could generate $3.5 billion in annual industrial feedstock sales and power generation revenues while reducing flaring penalties under environmental regulations.
Market analysts project Nigeria requires minimum upstream investment of $8 billion annually through 2035 to develop non-associated gas reserves and expand gathering infrastructure connecting producing fields to domestic distribution networks. Current capital deployment averages $3.2 billion yearly, with international oil companies prioritising offshore projects over onshore gas development amid security concerns in the Niger Delta region.
The NDPHC insurance assessments represent incremental progress toward operational sustainability for state-owned generation assets, which have historically operated without comprehensive coverage due to premium costs and underwriting reluctance. Securing adequate insurance protection enables access to equipment financing and performance guarantees required for long-term maintenance contracts with original equipment manufacturers.
Nigeria's energy investment deficit occurs as regional competitors advance gas monetisation strategies, with Mozambique attracting $50 billion in liquefied natural gas project commitments and Tanzania progressing $30 billion in offshore development plans. Without accelerated capital deployment and policy reforms addressing gas pricing, infrastructure access, and investment security, Nigeria risks ceding its natural resource advantage to emerging African producers in the 2030s energy transition landscape.