For decades, Nigeria’s oil industry has faced a multitude of challenges. Despite having vast quantities of crude, the mismanagement of revenue, weak agreements with international oil companies, an underinvestment in infrastructure, and widespread oil theft have left many opposed to the ongoing production of crude. Now, Nigeria has high hopes for its renewable energy sector, as it looks to diversify its energy sources and boost energy security over the coming years.

Oil theft has long been a problem in Nigeria, affecting both the financial gain from oil projects and health and safety in the sector. A committee, established earlier this year, assessed some of the oil sector’s challenges in Nigeria, including oil theft, bunkering operations, illegal export networks, and alleged compromises within regulatory and security systems. The committee published a report on its findings, which suggested that the government could significantly mitigate the country’s oil losses.

Satellite and agency tracking revealed at least 589 oil leaks across Nigeria in 2024, most of which were due to theft and sabotage. The Nigeria Extractive Industries Transparency Initiative estimated that, over 12 years, Nigeria lost 619.7 million barrels of oil, with a total value of $46.2 billion. In addition, Nigeria lost approximately $1.84 billion worth of petroleum products from its refineries over nine years.

While the government seeks to make its oil industry safer and more efficient, and, importantly, more profitable, many Nigerians are calling for the government to abandon its oil ambitions in favour of clean energy sources. While the government continues to back fossil fuels, it also sees a future for Nigeria in green energy, having set a target for net-zero carbon emissions by 2060 during the COP26 climate summit.

Nigeria’s Energy Transition Plan (ETP) led the way for the passing of the country’s Climate Change Act in 2021. The government then established the Energy Transition Office to oversee the implementation of the ETP, with a focus on six pillars – improved energy access, poverty reduction, modern energy access, job preservation, a sustainable transition, and legislation. The ETP aims to reduce emissions in several sectors, including power, transport, oil and gas, cooking, and industry. The ETP was revised and updated in 2024 to incorporate recent data and policy developments.

The government expects the ETP to support widespread job creation, with an estimated 340,000 jobs created by 2030 and up to 840,000 jobs by 2060. Nigeria views natural gas as a transition fuel and as key to its shift away from dirtier fossil fuels. However, to achieve its aims, the government will need to establish new green energy industries and attract investment for large-scale projects.

During the Nigeria Renewable Energy Innovation Forum 2025, the government signed contracts with a value of $435 million to expand the country’s renewable energy capacity. The agreements are expected to support the creation of 1,500 direct jobs across the country. Several state governments made deals with local and international renewable energy companies to develop solar, hybrid, and recycling projects to support power generation. Vice President Kashim Shettima said that $23 billion in funding was required in the short term to provide reliable power to millions of Nigerians without access to power.

To attract higher levels of investment to the sector, the government has committed to incentivising local production, streamlining regulations, and encouraging public-private partnerships.

Nigeria has significantly expanded its solar power industry in recent years, aiming to benefit from its abundant sunlight. In October, Nigeria’s Energy Commission signed a strategic partnership with the Chinese solar manufacturer LONGi to develop a solar panel plant with up to 1 GW of production capacity. This followed a visit to the Longi headquarters earlier in the month during which Longi “expressed strong interest in investing in Nigeria and demonstrated readiness to advance concrete plans for the construction of the factory.”

This is the latest of several solar manufacturing sites announced by the government. In September, Nigeria’s Rural Electrification Agency (REA) partnered with the Infrastructure Corporation of Nigeria and the Dutch solar manufacturer Solarge BV to establish a special purpose vehicle for the construction and operation of a 1 GW solar panel manufacturing plant in Nigeria.

Meanwhile, in March, the REA signed a deal with Lagos-based renewables developer Oando Clean Energy to develop a 1.2 GW solar assembly plant. The government has also discussed the possibility of introducing a ban on solar panel imports to help encourage local production. Technology Minister Uche Nnaji stated, “We have lithium in abundance here in Nigeria, so Mr President is already taking action… We are adding value to our raw materials.”

As Nigeria’s oil industry continues to face a multitude of challenges, the government is starting to drive investment in the country’s renewable energy sector. In addition to the expansion of its renewable energy capacity, the government is also looking at how to add value to its raw materials and ramp up manufacturing activities to drive economic growth.

By Felicity Bradstock for Oilprice.com

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