The Centre for the Promotion of Private Enterprise has raised concerns over the worsening state of Nigeria’s power sector after the electricity and gas sector contracted 15.30 per cent in the first quarter of 2026.

The economic think-tank described the development as the weakest performance recorded by the sector in recent years, warning that it poses serious risks to economic growth, industrial productivity and business competitiveness.

The Chief Executive Officer of the CPPE, Dr Muda Yusuf, on Thursday, disclosed this in a policy brief on the National Bureau of Statistics’ Q1 2026 Gross Domestic Product report released on Wednesday.

According to the CPPE, although Nigeria’s economy grew 3.89 per cent in Q1 2026 compared to 3.13 per cent in the corresponding period of 2025, the sharp decline in the electricity and gas sector remains a major concern.

“The most troubling aspect of the report is the sharp contraction of the electricity/gas sector by 15.30%, making it the weakest-performing sector in the quarter and the steepest contraction recorded by the sector in recent years. This underscores the deepening fragility of Nigeria’s power sector and raises serious concerns about the sustainability of economic growth, industrial productivity and business competitiveness,” Yusuf stated.

He noted that electricity remained the foundation of productivity, industrialisation and inclusive economic growth, stressing that the contraction reflected persistent structural weaknesses in power generation, transmission and distribution.

“This development is concerning because electricity is not merely another economic sector; it is the foundation upon which productivity, industrialisation, competitiveness and inclusive growth depend. A contraction of this magnitude signals persistent structural weaknesses across generation, transmission and distribution, as well as continuing liquidity and governance challenges within the power sector,” Yusuf noted.

The CPPE warned that worsening electricity supply would further increase production costs for businesses already grappling with high interest rates, rising logistics expenses and weak consumer purchasing power.

“The implications for businesses are severe. At a time when firms are already burdened by high interest rates, logistics costs and weak consumer purchasing power, deteriorating electricity supply further escalates production costs and weakens competitiveness. Heavy dependence on diesel and petrol-powered self-generation continues to erode profitability across the manufacturing, SME, hospitality, agro-processing and digital sectors,” Yusuf added.

The think-tank said sustainable economic transformation could not be achieved without stable and affordable electricity supply, adding that gains recorded in other sectors might not be sustainable under fragile energy infrastructure.

The CPPE therefore called for urgent reforms across the electricity value chain, including stronger investment in transmission infrastructure, improved market liquidity, accelerated metering and governance reforms to restore investor confidence in the sector.

It added that while sectors such as ICT, trade, financial services and entertainment recorded strong growth in Q1 2026, the economy still faced major structural challenges.

The organisation said the services sector remained the biggest driver of growth, contributing 57.73 per cent to GDP, while the trade sector emerged as the single largest contributor at 17.89 per cent.

It also noted that the oil refining sector expanded 37.46 per cent during the quarter, driven largely by the operations of the Dangote Refinery and growing regional demand for refined petroleum products.

However, the CPPE maintained that Nigeria’s manufacturing sector remained fragile despite recording 3.29 per cent growth, as high energy costs, elevated interest rates, poor infrastructure and logistics bottlenecks continued to undermine industrial productivity.

The group further expressed concern over the slowdown in the oil and gas sector, which declined from 6.79 per cent growth in Q4 2025 to 2.57 per cent in Q1 2026.

It also highlighted contractions in the aviation and textile sectors, attributing the decline to high operating costs, exchange rate pressures, multiple taxation and weak industrial capacity.

While describing the overall GDP report as encouraging, the CPPE stressed that economic growth must translate into improved welfare and stronger purchasing power for Nigerians.

Yusuf stated, “The next phase of economic reform should therefore focus more deliberately on productivity enhancement, industrialisation, power sector reforms, export competitiveness and inclusive growth. These remain the critical foundations for sustainable economic transformation and improved welfare outcomes for Nigerians.”