FG Seeks $2 Billion Loan from China to Strengthen National Power Grid

The Federal Government of Nigeria is currently in advanced discussions with the Export-Import Bank of China to secure a $2 billion loan aimed at financing the construction of a new high-capacity power transmission infrastructure, widely referred to as the “super grid.” The project is expected to significantly boost the nation’s electricity transmission capacity, support industrial growth, and address the persistent power supply issues that have hindered Nigeria’s economic development for years.

Minister of Power, Adebayo Adelabu, disclosed this during the recent Nigerian Economic Summit in Abuja, explaining that the super grid is designed to link major industrial zones and population centers across the country through modern substations, upgraded transmission lines, and smart monitoring systems. According to him, the project will ensure efficient load management, reduce technical losses, and deliver more stable electricity to consumers.

Adelabu emphasized that Nigeria’s current power transmission network is outdated and incapable of meeting growing demand, particularly in the country’s industrial clusters. Many manufacturers and large-scale businesses have disconnected from the national grid due to frequent blackouts and unstable voltage, opting instead for self-generated power through diesel and gas generators. The minister noted that the new grid will help restore confidence among these industries and encourage them to reconnect to a more reliable national power system.

He revealed that the proposal for the $2 billion facility has already received the Federal Executive Council’s approval, and discussions with the Chinese lender are at an advanced stage. Once finalized, the loan will cover the cost of constructing new transmission corridors, installing advanced transformers, and implementing smart grid technologies across key regions of the country. The goal is to double Nigeria’s transmission capacity within the next few years and significantly improve electricity delivery to homes and businesses.

Currently, Nigeria generates an installed capacity of over 13,000 megawatts, but only about 4,000 megawatts are transmitted to end users due to system bottlenecks and outdated infrastructure. The frequent grid collapses and inefficiencies have not only crippled industrial productivity but also driven up the cost of doing business. Adelabu said the super grid will serve as a modern backbone for the power sector, capable of handling higher loads, integrating renewable energy sources, and enhancing system resilience.

The project will focus on strengthening the eastern and western power corridors — regions that host a majority of the country’s manufacturing and economic activities. These areas have suffered the most from inadequate transmission capacity and voltage instability. The government hopes the super grid will make power supply more stable and predictable, allowing industries to operate efficiently while cutting energy costs.

Part of the plan also includes decentralizing the energy mix to accommodate both traditional and renewable sources. The Power Minister explained that by improving transmission efficiency, the government aims to reduce the overall reliance on diesel-powered generators, which have been a major contributor to environmental pollution and operational expenses. He further stated that stabilizing the grid will help curb inflationary pressures linked to rising energy costs and strengthen economic competitiveness.

Recent reforms in the electricity sector have started yielding positive results, with revenue collection by power distribution companies improving significantly due to tariff adjustments and regulatory interventions. Adelabu expressed confidence that the super grid project will complement these reforms by improving service delivery and attracting new investments into the sector.

Energy experts have welcomed the development, noting that Nigeria’s power infrastructure needs large-scale upgrades to meet growing demand. They believe that if the super grid is implemented effectively, it could transform the energy landscape, create thousands of jobs, and boost manufacturing output. However, they also warned that project execution must be transparent and free from the inefficiencies that have plagued similar projects in the past.

There are also concerns about the sustainability of foreign borrowing, especially regarding debt repayment and project oversight. Critics have urged the government to ensure that the loan terms are favorable and that adequate safeguards are put in place to prevent mismanagement. Nonetheless, the consensus among stakeholders is that investing in transmission infrastructure is a critical step toward achieving energy security.

If successful, the super grid is expected to revolutionize Nigeria’s electricity transmission system, enhance industrial productivity, and reduce dependence on costly self-generation. It could also position Nigeria as a regional energy hub, capable of supporting West Africa’s growing power needs. The project, when completed, will mark one of the most significant milestones in the country’s journey toward a stable, efficient, and sustainable power sector.