A Signal In The Sequencing
Some days back, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, met with the Special Adviser to the President on Energy, Olu Verheijen. Officially, the agenda focused on coordination between fiscal policy and energy reform—expanding fiscal space for investment and rethinking Nigeria’s electricity market.
Recently, the Federal Executive Council approved three major rail projects: the Lagos Green Line (Phase 1A), the Kano Metro City Rail, and the Kaduna Light Rail. Together, they amount to roughly $2.99 billion in infrastructure spending, to be financed through the Ministry of Finance Incorporated (MOFI).
Rail Is Not Just Transport—It Is Energy Demand
Electric rail systems are among the most power-intensive public infrastructure assets a country can build. They are not passive consumers of electricity; they are anchour loads.
Nigeria already has a preview of the problem. The Lagos light rail relies heavily on captive generation because the national grid cannot guarantee the reliability it requires.
If Kano and Kaduna follow the same pattern, the country is effectively building three rail systems—and three parallel power systems to keep them running.
That is not infrastructure expansion. It is infrastructure duplication.
The Cost Of A Fragmented Grid
This duplication has real economic consequences.
When rail operators must generate their own electricity, costs rise sharply. Maintenance becomes more complex. Ticket pricing becomes politically sensitive. And the fiscal burden shifts quietly back to the state through subsidies or indirect support.
In other words, weak electricity infrastructure does not just affect households and industries—it directly undermines the viability of multi-billion-dollar transport investments.
A $2.99 billion rail programme can only deliver its full return if electricity supply is stable, predictable, and commercially reliable. Otherwise, it begins to leak value before the first train fully enters commercial service.
MOFI And The Question Of Priorities
MOFI, the government’s investment and asset management arm, sits at the centre of this financing structure. It already holds stakes in over 130 companies and is now being used to finance large-scale infrastructure directly.
This signals a deliberate shift: the state is increasingly using its balance sheet to crowd in long-term infrastructure that private capital considers too risky or too slow to mature.
That role is legitimate. But it also exposes a strategic tension.
If nearly $3 billion in financing capacity can be deployed for rail, the question becomes unavoidable: why is a comparable push not directed at electricity distribution reform—the single most important determinant of whether these same rail assets will operate efficiently?
The Real Bottleneck Is Not Capital—It Is Power
The answer is less about funding availability and more about sequencing.
The Oyedele–Verheijen engagement points to an attempt to unlock fiscal space and restructure the electricity market. And in fairness, some foundations already exist: the Electricity Act of 2023 has decentralised the sector, and Lagos has passed its own electricity law.
But the gap is no longer legal. It is operational.
Metering, billing discipline, revenue assurance, and distribution bankability remain unresolved. Without these, private and state-backed investment in electricity infrastructure will struggle to scale.
Building Two Systems Or Fixing One
At the core of the issue is a simple design choice: Nigeria is simultaneously building transport infrastructure while its energy infrastructure remains unstable.
The risk is that both systems evolve in parallel without integration—each compensating for the other’s weakness rather than reinforcing its strength.
A modern rail network cannot outperform the grid that powers it.
Either electricity is fixed first, or both are built together in lockstep. Anything else locks in inefficiency at scale.
The Test Ahead
The sequencing we have seen so far suggests awareness of this constraint. The meeting came first. The rail announcement followed.
The real test is what comes next: whether electricity reform moves from policy alignment to execution at the same pace as infrastructure rollout—or whether Nigeria continues building billion-dollar systems that must constantly work around a fragile grid.
“You cannot build a $3 billion rail network and power it with generators. You fix the grid first, or you build both in lockstep.”
