Success Nwogu 
SUCCESS NWOGU reviews the trends and developments that characterised the energy sector in the first quarter of 2025
The period witnessed some developments in Nigeria’s energy sector, which encompass power, oil and gas, mining and steel development. It was characterised by policy shifts, infrastructure development, economic adjustments, and operational challenges.
While there were notable and positive achievements in power generation, energy access, and refining capacity, challenges such as infrastructure deficits, market volatility, security threats, high production costs and environmental concerns persisted.
In addition, pricing disputes, and funding constraints, continued to hinder rapid growth in the sector.
Oil production fluctuations
The target of the Federal Government to achieve 2.06 million barrels per day (bpd), inclusive of condensates, in 2025, was threatened as Nigeria’s crude oil production experienced notable fluctuations in the first quarter.
In January, output reached 1.75 million barrels per day (bpd), surpassing December’s 1.5 million bpd. However, by February, production dropped to 1.671 million bpd, comprising 1.465 million bpd of crude oil and 206,948 bpd of condensates.
In March, Nigeria made the biggest crude oil supply reduction among members of the Organization of Petroleum Exporting Countries (OPEC) as it cut crude oil output by 50,000 barrels per day.
Bloomberg, in a report on its survey, attributed the reduction in Nigeria’s production to delays in loading Bonny Light crude due to the recent explosion on March 17, at the Trans-Niger Pipeline, one of Nigeria’s largest oil pipelines.
TNP, a major oil transportation artery in Nigeria, has a capacity of approximately 450,000 barrels per day (bpd). The pipeline which spans approximately 180 kilometers (112 miles) and is operated by Shell Petroleum Development Company (SPDC), has been acquired by a consortium of companies under Renaissance Africa Energy Holdings.
Renaissance is a consortium of Petrolin, an international energy company with global trading experience and a pan African outlook and four successful Nigerian independent oil and gas companies: ND Western Limited, Aradel Holdings Plc, FIRST Exploration and Petroleum Development Company Limited, and the Waltersmith Group.
According to the Bloomberg survey, Nigeria made the crude reduction also to maintain an average of 1.5 million bpd, in line with its OPEC quota, as the cartel had demanded from member nations reduced supplies.
OPEC reduced overall production by 110,000 bpd in March. In general, the volatility in production was attributed to factors such as: Pipeline vandalism and crude oil theft in the Niger Delta, delays in restarting operations in some oil fields, maintenance activities affecting output levels and compliance with OPEC+ production quotas.
The period also witnessed Renaissance Africa Energy Holdings complete its acquisition of Shell Petroleum Development Company of Nigeria (SPDC) on March 13, 2025, for $2.4 billion.
This acquisition includes SPDC’s onshore assets in Nigeria, encompassing acreage in the Niger Delta region. This acquisition marks a significant shift in Nigeria’s oil and gas industry, with local entities taking on a more prominent role in the sector.
Dangote Refinery
The $20 billion Dangote Refinery, Africa’s largest, introduced new competition in the domestic fuel market.
The refinery, with a capacity of 650,000bpd, began supplying refined petroleum products at lower prices compared to imports, while the state-owned Nigerian National Petroleum Company Limited, (NNPC Ltd) joined in reducing petrol prices to remain competitive.
The price adjustments initially led to a reduction in fuel costs in Lagos and other major cities, with petrol prices falling to N860 per liter.
This price war benefited consumers but raised concerns about profitability for NNPC Ltd’s refineries, which were struggling to remain viable.
Naira-for-crude
However, growing concerns over the possible increase in prices of petroleum products from Dangote refinery, should it continue to import crude given uncertainty over the continuation of the naira-for-crude policy introduced by the Federal Government in October 2024.
It allowed local refiners to purchase crude oil in naira instead of dollars. It was aimed to support domestic refining capacity, reduce reliance on imported petroleum products, and stabilize the local currency by easing pressure on foreign exchange reserves.
Reports have it that Dangote refinery had intensified arrangements to import more crude with the recent report indicating that it would import at least 24 million barrels of US crude oil over the next year.
Recall that some months ago, Dangote Petroleum Refinery accused the Federal Government of not meeting its target to supply
FG’s target to achieve 2.06 mbpd, in 2025 was threatened as Nigeria’s crude oil production experienced notable fluctuations in the first quarter
crude oil to the refinery under the naira-for-crude initiative. According to it, the amount of crude received from the Nigerian National Petroleum Company Limited (NNPC Ltd) was “peanuts” compared to the volume needed to ramp the production of refined products.
The Vice President of Dangote Industries Limited, Devakumar Edwin, said the NNPC Ltd had not met the target to deliver a minimum of 385,000 bpd since the commencement of the program in October.
He said: “We need 650,000bpd. NNPC Ltd agreed to give a minimum of 385,000 bpd, but they are not even delivering that.”
But recently, NNPC Ltd said that in aggregate, it has made over 84 million barrels of crude oil available to the Dangote Refinery, since the refinery’s commencement of operations in 2023.
It specified that it has made over 48 million barrels of crude oil available to the refinery under the contract for the sale of crude oil in Naira since October 2024.
Chief Corporate Communications Officer, NNPC Ltd, Olufemi Soneye clarified these in a statement. Soneye said: “To clarify, the contract for the sale of crude oil in Naira was structured as a six-month agreement, subject to availability, and expires at the end of March 2025.
Discussions are currently ongoing towards emplacing a new contract. “Under this arrangement, NNPC has made over 48 million barrels of crude oil available to Dangote Refinery since October 2024.
In aggregate, NNPC has made over 84 million barrels of crude oil available to the Refinery since its commencement of operations in 2023.”
However, recently Dangote Petroleum Refinery announced that it has temporarily suspended the sales of petroleum products in naira.
The refinery started the sale of petroleum products in naira on October 1, 2024 as part of the Federal Government’s directive aimed at reducing pressure on foreign currency reserves and supporting local production.
But in a notice to its customers signed by the management, it stated that the suspension became necessary to avoid a mismatch between its sales proceeds and its crude oil purchase obligations, which are currently denominated in US dollars.
Nigerians were, therefore, shocked and further traumatised and impoverished when the prices of fuel skyrocketed from N860/L in Lagos and a little bit above in other parts of the country to between N930 in Lagos and above in other parts of the country.
Gas expansion and domestic utilisation
Nigeria’s gas sector received renewed government attention, with policies aimed at increasing domestic gas utilisation.
The Nigerian Gas Expansion Program (NGEP) continued efforts to boost gas-to-power projects, compressed natural gas (CNG) adoption, and liquefied petroleum gas (LPG) usage.
Some key developments were recorded which included: The launch of new CNG-powered buses in Lagos, aimed at reducing reliance on petrol and diesel; increased investments in LPG facilities to enhance cooking gas affordability.
There was also progress on major gas pipeline projects, including the Ajaokuta-Kaduna-Kano (AKK) pipeline, which is expected to enhance gas distribution.
Power
Electricity users in Nigeria continued to lament poor power service delivery in spite of the announcement of Increase in power generation The Transmission Company of Nigeria (TCN) reported a new peak electricity generation of 5,713.6 megawatts (MW) on March 2, surpassing the previous record set in February.
It attributed the increase to maintenance and upgrades to several power plants and transmission lines. In a latter statement, the Minister of Power, Adebayo Adelabu, said Nigeria achieved historic milestones in power generation and set new records of 6003mw.
Adelabu’s Special Adviser on Strategic Communication, Bolaji Tunji, in a statement said that on Sunday, March 2, 2025, Nigeria achieved a record available power generation of 6,003 megawatts (MW), the highest in the nation’s history.
He said: “This was followed by another landmark within the period, when the country recorded a peak generation evacuation of 5,801.84 MW and a daily maximum energy output of 128,370.75 megawatt-hours (MWh).
“The landmark recorded signifies that if there was electricity demand from the Distribution companies then Generating companies would have the capacity to increase power generation to over 6000 MW.
“The record peak generation of 5,801.84 MW achieved on Tuesday, March 4, 2025 compared to a previous peak of 5,801.60MW achieved in March 2021 is also quite critical as it shows the capacity of generated energy that was transmitted through the transmission grid.”
Despite these advancements, there were blackouts in some areas many times, causing many businesses and industries to seek alternative energy sources, including solar and gas-powered generators, to ensure stability.
FG’s Initiatives
To address Nigeria’s longstanding electricity supply challenges, the Federal Government unveiled a $23.2 billion program designed to close the power gap.
Of this sum, $15.5 billion was expected to come from private sector investments, demonstrating a push toward publicprivate partnerships.
The initiative included the expansion of transmission infrastructure, increased investment in renewable energy, and efforts to reduce reliance on government subsidies. A significant controversy arose concerning electricity tariffs.
Concerns showed that the Nigerian Electricity Regulatory Commission (NERC) planned to implement a cost-reflective tariff system, aiming to eliminate subsidies in a phased manner.
But this decision led to backlash from consumer advocacy groups who argued that higher tariffs would burden low-income households already struggling with inflation.
Grid expansion and mini-grid devt
Given the fragility of the national grid, the government focused on decentralized electricity solutions. Private sector-driven mini-grid projects gained momentum, especially in rural and underserved areas.
Companies investing in solar hybrid mini-grids reported expansion, with some communities achieving improved power usage.
Additionally, the World Bankfunded Nigeria Electrification Project (NEP) continued its drive to support off-grid energy solutions, ensuring that millions of Nigerians had access to affordable and sustainable power.
Power sector challenges
While power generation showed improvements, systemic issues persisted: Poor transmission and distribution infrastructure leading to high energy losses, insufficient gas supply to thermal plants, resulting in frequent power plant shutdowns and debt accumulation by electricity distribution companies (DisCos), affecting revenue collection and service quality.
While there were notable and positive achievements in power generation, energy access, and refining capacity, challenges such as infrastructure deficits, market volatility, security threats, high production costs and environmental concerns persisted.
Steel sector
One of the most significant developments in Nigeria’s steel sector in Q1’25 was renewed efforts to revive the Ajaokuta Steel Complex. After years of stagnation, the Nigerian government announced a new partnership with a consortium of Chinese and Russian investors to restart production.
This deal, estimated at $2.5 billion, aims to restore Ajaokuta’s operations by 2026, with preliminary refurbishment beginning in March 2025.
The Federal Government also announced the finalisation of a $500 million loan from the African Development Bank (AfDB) to upgrade critical infrastructure around the steel complex, including roads, rail, and power supply.
In addition, Nigeria’s push for local steel production intensified as the government increased import tariffs on foreign steel products to encourage local manufacturers.
Steel producers, including Dana Steel, African Industries Group, and Kam Industries, ramped up production to meet demand, particularly in the construction and automobile industries.
Despite these efforts, raw material shortages (especially iron ore and coking coal) and high energy costs remained major hurdles. Steel manufacturers continued to advocate for lower electricity tariffs and increased gas supply to sustain production.
Automotive, construction sectors drive demand
The automobile industry, particularly the rise of local vehicle assembly plants, created higher demand for flat steel products, while Nigeria’s housing deficit fueled increased orders for reinforced steel bars and structural steel.
Cement manufacturers also collaborated with steel producers to support large-scale infrastructure projects, including highways and bridges.
Challenges and opportunities
The following challenges continued in the steel subsector: High production costs due to inadequate power supply and logistics issues, overdependence on imported raw materials, especially coking coal and competition from cheaper, imported steel, despite government-imposed tariffs.
There were new investments in iron ore mining, especially in Kogi and Zamfara states; growing demand from the real estate and industrial sectors and government incentives for local steel producers, including tax holidays and reduced import duties on machinery.
Mining sector
Nigeria’s gold mining sector continued to expand, with commercial operations in Osun, Zamfara, and Kaduna states contributing significantly to mineral exports.
Thor Explorations Limited, the leading gold producer, announced record gold output from its Segilola Gold Mine, reporting an eight per cent increase in production compared to Q4’24.
The lithium boom also gained momentum in Q1 2025, driven by global demand for electric vehicle (EV) batteries.
Nigeria secured new foreign direct investments (FDI) from Chinese and Australian firms, particularly in Nasarawa, Kwara, and Kogi states, where high-grade lithium deposits were identified.
Policy reforms and investment climate
To boost investor confidence, the Nigerian government introduced the Solid Minerals Development Roadmap 2025, which focused on reducing illegal mining through stricter regulations and community partnerships, incentivizing local processing and refining of minerals to reduce raw material exports, improving mining infrastructure, including roads and rail lines to mining hubs.
The Nigeria Mining Cadastre Office (NMCO) also streamlined the licensing process, reducing approval times for exploration and mining leases, which led to an increase in new mining permits.
Despite positive developments, illegal mining and security threats remained pressing concerns. Banditry and armed groups in Zamfara, Niger, and Plateau states continued to exploit Nigeria’s weak mining security framework.
Last Line
Inspite of the challenges, new opportunities were noticed in form of foreign investments, particularly in lithium and gold mining.
There was also government-backed incentives for value addition and local refining as well as technological advancements in operations and exploration.
