Lagos State Government invites firms to bid for 4,000MW gas-fired power plant

• The Lagos State government seeks investors to bid for a 4,000MW gas-fired power plant
• Power hubs will generate up to 500MW each with a minimum required output of 100MW from participating companies
• The initiative follows the decentralisation of the power sector with the signing of the Electricity Bill

The Lagos State Government is inviting independent power producers and energy solution firms to submit bids for the establishment of gas-fired power plants under its Clean Lagos Electricity Market (CLEM) initiative.

The initiative seeks to generate up to 500 megawatts (MW) of electricity across four designated hubs in the state to address the state’s electricity shortfall being that it.

The Ministry of Energy and Mineral Resources (MEMR), in partnership with the Office of Public-Private Partnerships (OPPP), announced this on Wednesday, November 6.

The government said that, with a population of over 20 million, Lagos, Africa’s largest metropolitan area and Nigeria’s commercial nerve centre, receives less energy supply than it demands from the national grid.

While the city requires over 6,000 MW of electricity, it currently receives less than 2,000 MW at peak periods.

The ministry said, “The state faces pressing energy challenges due to rapid urbanisation and growth in economic activities.

“There is an urgent need for sustainable alternatives to the supply of energy from the national grid, which is inadequate for the entire country.

“This initiative is designed to close the gap between Lagos’ energy demand and supply, enabling the state to power its industrial, commercial, and residential needs more effectively.

The ministry noted that the power plants will be sited close to existing electricity distribution companies (DisCos) substations to optimise distribution.

It said each hub is expected to generate up to 500MW to meet the state's growing energy needs, with a minimum required output of 100MW from participating companies.

The government also assured of its commitment to support investors in the state’s energy sector.

It said, “The minimum intended generation capacity of electricity for each of the four hubs shall be 500MW, which one or more power-generating firms shall generate.

“Lagos is creating an enabling environment for private sector investment in the energy sector, and we are confident that this project will attract top-tier companies capable of delivering world-class solutions.

The government further said the scope of the project includes financing, engineering, construction, commissioning, and operation of the plants. Companies must also arrange a constant supply of gas and other fuels for sustained operations.

CLEM Initiative follows FG’s power decentralisation move

The Lagos State’s initiative follows the federal government’s move to decentralise power generation and distribution.

Recall that President Bola Tinubu signed the Electricity Bill into law in 2023, which empowers states, companies and individuals to generate and generate. This was followed by the government’s removal of electricity subsidy in February 2024, leading to tariff hikes.

Following the passage of the bill, 12 states in Nigeria, including Lagos, resolved to start generating power in their respective states. The states’ move is further consolidated by the numerous challenges facing the sector, including poor power supply, tariff hikes and incessant collapse of the national grid.

In 10 years, the national grid has collapsed 105 times, 93 times under President Muhammadu Buhari and 12 times in just 16 months of President Bola Tinubu’s administration. In 2024 alone, it has collapsed about nine times. 

In October, the grid collapsed three consecutive times within one week on October 14, 15 and 19. It has also collapsed multiple times in November. The frequent grid collapse may stall Nigeria’s goal of achieving 6,000 megawatts (MW) of power by year-end.

Nigeria loses $26bn yearly to electricity shortages –Report

Meanwhile, TheRadar reported that Nigeria suffers an estimated annual economic loss of $26 billion due to electricity shortages, according to a Standard Bank, Africa Trade Barometer report.

According to the report, businesses shore up electricity shortages by spending nearly $22 billion annually on off-grid fuel, which leads to increased operational costs.