Despite a significant increase in the 2025 budget allocation to the Ministry of Power, the Nigerian Economic Summit Group (NESG) has stated that the funding is still inadequate to address the country’s electricity challenges.
The allocation for the power sector was raised to N1.90 trillion, up from the initially proposed N418.37 billion for 2025.
However, according to NESG’s recent report titled “2025 FGN Budget Analysis: Can the Budget Deliver Major Economic Boost?”, the increase is not enough to resolve current electricity tariff reforms.
The report also identified non-cost-reflective tariffs and poor revenue collection as key issues that have led to the collapse of several power distribution companies (DisCos).
Typically, the energy sector budget is intended to fund initiatives aimed at boosting infrastructure and improving overall performance.
Of the newly allocated amount, N810 billion is designated for meeting Nigeria’s funding obligations under the $1.74 billion World Bank Power Sector Recovery Programme (PSRP), which focuses on enhancing the technical and financial performance of electricity distribution companies.
In addition, N269.74 billion has been earmarked for special intervention projects aimed at addressing critical infrastructure deficits and expanding electricity distribution across the country.
Beyond these commitments, the federal government has also proposed various initiatives to strengthen the sector, including the establishment of mini-grids in educational institutions and the installation of solar-powered street lights.
Speaking on the longstanding challenges impeding progress in the sector, the NESG report stated:
“Nigeria has historically faced challenges in implementing power sector budgets due to bureaucratic inefficiencies, corruption, and delays in project execution. While the 2025 budget signals a strong commitment to improving the power sector, it lacks a clear accountability framework to ensure the timely and transparent execution of projects.”
The report stressed the need for a robust monitoring and evaluation mechanism to mitigate the risks of fund misallocation, project abandonment, and underperformance of initiatives. It also warned that without comprehensive reforms, the increased budget may have limited impact.
