Nigeria’s oil wealth, blackouts and costly fuel still dominate daily life

The lights in Ikeja come back like a small victory

In a workshop in Ikeja, Mr. Kofi treats a brief return of electricity almost like a celebration. His tailoring business has spent much of the day in the dark after the generator ran out of fuel, a familiar rhythm in Lagos and across Nigeria, where public power is so unreliable that ordinary life often depends on private fixes.

That scene captures the country’s central paradox. Nigeria is Africa’s biggest oil producer, yet households and small businesses still pay heavily for fuel and plan their work around blackouts. The problem is not a lack of oil alone. It is a system in which weak power supply, expensive diesel and petrol, and fragile refinery logistics all collide.

A power tariff built around service, but service is still inconsistent

Nigeria’s electricity regulator says the Service-Based Tariff scheme, introduced on November 1, 2020, was meant to link tariffs to hours of supply. Under that model, the best-served Band A customers are promised 20 hours of electricity a day. In theory, the arrangement rewards better service. In practice, the gap between the promise and the lived reality remains wide.

The Nigerian Electricity Regulatory Commission also issued new MYTO orders for 2024 on January 31, 2024, as it continued to refine the pricing framework. But tariff reform has not erased the core problem: the grid remains unstable, and outages still force homes and businesses to fall back on generators. In cities served by the Abuja Electricity Distribution Company, Ikeja Electricity Distribution Company, Kano Electricity Distribution Plc and Ibadan Electricity Distribution Plc, the same pattern repeats, even as billing rules change.

For businesses like Kofi’s workshop, the result is a hidden tax on productivity. Electricity is not just an inconvenience when it fails. It becomes a cost center, a source of fuel expenses, downtime, lost orders and interrupted schedules.

The cost of keeping a business running

The economic damage is now measurable. The World Bank estimates that unstable power supply costs Nigeria about $29 billion annually, a staggering drag on output and investment. A recent enterprise survey found that 82.5% of Nigerian firms experience frequent electrical outages, underscoring how normal interruption has become.

That explains why generators remain part of everyday commerce, from market stalls to factories. It also explains why fuel prices matter so much to people far beyond the transport sector. When petrol rises, the cost flows through nearly everything, from sewing and refrigeration to small-scale manufacturing and delivery services.

Vanessa Aguda, a cosmetic chemist and brand founder, captured the frustration plainly when she asked why fuel is so expensive in a country that supplies oil to others. Her question reflects a national grievance: the resource that should cushion households from price shocks has instead become another source of pressure.

Recent price moves have only sharpened that strain. Fuel has climbed to around 1,300 naira per litre, up from a national average of 1,034 naira in January. For workers and small firms that already pay for backup power, the increase compounds an existing burden rather than replacing it.

Why global shocks still land so hard in Nigeria

The latest jump is not only a domestic story. It has also been tied to the war in Iran and the closure of the Strait of Hormuz, which pushed global crude prices higher. Because Nigeria remains deeply exposed to imported refined fuel and international pricing, the shock moved quickly from geopolitics to the pump.

That vulnerability stood out even earlier in the year, when the Central Bank of Nigeria projected in January 2026 that petrol would hover around 950 naira per litre over the year. The forecast already assumed a fragile market. Then the pricing environment shifted again. Dangote Petroleum Refinery’s gantry price was reported at 774 naira per litre in February 2026 after a reduction, but later reporting said loading prices were raised again as crude and operating costs changed.

The pattern matters because it shows how quickly downstream prices can move even when local refining improves supply. A refinery can help ease imports, but it cannot fully insulate consumers from crude volatility, exchange-rate pressure, logistics costs and operating expenses.

An oil giant that still exports its wealth instead of refining it

The deeper problem is structural. Nigeria has spent decades underinvesting in refinery capacity, so even with oil output averaging 1.71 million barrels per day in July 2025, including crude and condensates, it has long exported raw oil and imported refined petrol at international prices. That leaves households and businesses exposed whenever world prices rise.

A later industry report said Nigeria exported 82% of its oil output in 2025, a reminder that the country still sends much of its value abroad before trying to buy back fuel at a premium. The mismatch between production and domestic benefit is the heart of the crisis. Nigeria may pump crude, but it does not consistently turn that crude into affordable energy at home.

Even the flagship Dangote refinery has not escaped the bottlenecks. In March 2026, reporting said the Federal Government and Nigerian National Petroleum Company Limited were exploring foreign crude supply for the refinery through third-party international traders. That is a striking sign of how complicated crude access remains, even for a plant built to reduce import dependence.

Reuters-based reporting in 2026 also said Nigerian crude producers supplied local refineries with less than half of the crude volumes allocated under domestic supply rules in the first quarter of 2026. That shortfall reinforces the same point from another angle: the country’s refining problem is not only about infrastructure, but also about supply discipline, contracting and enforcement.

Why the crisis keeps returning

Nigeria’s fuel and power problems are often described as temporary shocks, but the evidence points to something more durable. Grid collapses, repeated tariff adjustments, refinery constraints, and chronic fuel price volatility all point to a system that is still failing to convert national resources into household security.

For Mr. Kofi in Ikeja, the issue is immediate and practical. A few hours of power feels like relief because the alternative is silence, heat and a generator waiting for fuel. For the broader economy, the same failure shows up in lost output, higher operating costs and a permanent premium on everyday life.

Nigeria’s oil wealth is real. So is the contradiction. Until power becomes dependable and refining becomes reliable, the country will keep exporting crude, importing pain, and asking ordinary people to pay twice for the same energy.