Nigeria Seeks $2 Billion China Loan for New ‘Super Grid’ to Ease Power Shortages

Nigeria is negotiating with China’s Export-Import Bank for a $2 billion loan to finance the construction of a new “super grid,” a move aimed at addressing persistent power shortages and improving electricity delivery to industrial zones across the country.

The disclosure came from Minister of Power, Adebayo Adelabu, during an economic summit in Abuja on Monday, where he emphasized that the initiative is central to the government’s broader strategy to decentralize power generation and restore confidence among large-scale industrial consumers. Many of these businesses had disconnected from the national grid over the years due to frequent blackouts and transmission failures.

“The goal is to decentralize power generation in Nigeria and encourage heavy commercial users who left the grid because of its unreliability to return,” Adelabu said. He added that the super grid would connect eastern and western regions of the country, where the majority of Nigeria’s industrial consumers are concentrated.

For decades, Nigeria’s power infrastructure has struggled with multiple collapses, technical faults, and insufficient generation capacity. These challenges have hindered industrial growth and led to higher operational costs for businesses reliant on consistent electricity. Experts say a modernized grid could be a turning point for the sector, particularly for manufacturers and large commercial users who have increasingly relied on private generators to sustain operations.

Government Approves Financing, Boosts Revenue Through Tariff Adjustments

Adelabu confirmed that the Federal Executive Council has already approved financing arrangements for the super grid project. This approval signals a strong government commitment to modernizing the country’s power transmission system and improving reliability for key economic hubs.

The Minister also highlighted recent tariff adjustments for urban electricity consumers, which have already yielded a 70% increase in revenue for the industry in 2024. The figures are projected to rise further by 41% this year, reaching N2.4 trillion ($1.6 billion).

These increases are expected to enhance the financial viability of future investments in the electricity sector and make large-scale infrastructure projects like the super grid more sustainable.

“This new transmission infrastructure is not just about connecting regions; it’s about ensuring that more power reaches industrial zones efficiently and that we can build investor confidence in Nigeria’s electricity sector,” Adelabu said.

A Step Toward Industrial Reconnection

Industrial users who previously disconnected from the national grid are seen as critical to Nigeria’s economic growth. By providing reliable electricity through the super grid, the government hopes to attract these businesses back to the official power network, reducing dependence on expensive generators and fostering large-scale industrial expansion.

The project also aligns with broader government efforts to decentralize power production, enabling more localized energy generation and distribution. Analysts note that decentralization could reduce the frequency of nationwide blackouts, improve efficiency, and create opportunities for private investment in smaller-scale power projects across the country.

While the loan from China’s Export-Import Bank is expected to cover a significant portion of the project, Adelabu emphasized that the federal government is also exploring additional funding mechanisms to ensure the grid’s successful completion.

Energy experts have welcomed the announcement, citing the urgent need for improved infrastructure. They stress that a well-functioning super grid would not only reduce operational costs for businesses but could also lower electricity tariffs for consumers in the long term, if managed efficiently.

With an estimated timeline still under discussion, stakeholders are hopeful that the super grid could become operational within the next few years, providing a more reliable power supply to support Nigeria’s industrial ambitions and overall economic growth.

As Nigeria continues to seek solutions to chronic power shortages, projects like the super grid underscore the importance of international collaboration, strategic investment, and effective policy implementation in revitalizing the country’s electricity sector.