Nigeria's Energy Sector Liberalization: Strategic M&A Opportunities and Foreign Capital Inflows

Nigeria's energy sector is undergoing a transformative phase, driven by sweeping liberalization policies and regulatory reforms that are reshaping the landscape for strategic mergers and acquisitions (M&A) and attracting significant foreign capital. Under President Bola Ahmed Tinubu's leadership, the country has prioritized modernizing its energy infrastructure, diversifying its energy mix, and creating a competitive environment for private investment. These efforts are not only addressing long-standing structural challenges but also unlocking unprecedented opportunities for investors and industry players.

Strategic M&A Opportunities: A New Era of Consolidation

The Nigerian energy sector has witnessed a surge in high-value M&A activity in 2024, fueled by the government's bold reforms and the exit of international oil companies (IOCs) from onshore operations. A landmark transaction was the $2.4 billion acquisition of Shell Petroleum Development Company (SPDC) by the Renaissance consortium, a deal that marked the largest single M&A transaction in Nigeria in over a decadeFG approves National Integrated Electricity Policy to reshape power sector in Nigeria^[1]. This was followed by Oando's $783 million acquisition of Eni's Nigerian onshore assetsFG approves National Integrated Electricity Policy to reshape power sector in Nigeria^[1] and Seplat Energy's $800 million purchase of Mobil Producing Nigeria Unlimited (MPNU)FG approves National Integrated Electricity Policy to reshape power sector in Nigeria^[1]. These deals reflect a broader trend: local firms are capitalizing on favorable regulatory conditions to acquire IOCs' assets, which are often undervalued due to operational and security challenges.

The government's Presidential Directives (40, 41, and 42) have played a pivotal role in catalyzing this activity by introducing cost recovery incentives, royalty adjustments, and profit-sharing mechanismsA Year of Transformation: Nigeria’s Energy Reforms in 2024^[2]. These reforms have reduced fiscal risks for investors, making Nigeria's energy assets more attractive. Additionally, the National Integrated Electricity Policy (NIEP), approved in May 2025, has laid the groundwork for private sector participation in renewable energy and grid expansion, further diversifying M&A opportunitiesFG approves National Integrated Electricity Policy to reshape power sector in Nigeria^[1].

Foreign Capital Inflows: A Magnet for Global Investors

Nigeria's energy reforms have already yielded tangible results in terms of foreign investment. According to a report by The Cable, the country recorded $16–17 billion in foreign investment inflows in 2024, attributed to the implementation of the Petroleum Industry Act (2021) and Tinubu's executive ordersFG approves National Integrated Electricity Policy to reshape power sector in Nigeria^[1]. This surge is driven by Nigeria's vast energy reserves—37 billion barrels of crude oil and 210 trillion cubic feet of natural gas—as well as its strategic position in the African Continental Free Trade AreaNigeria eyes $122 billion investment with approval of electricity plan^[3].

The government's focus on energy transition has further amplified investor interest. Vice President Kashim Shettima highlighted a $200 billion energy transition opportunity, emphasizing Nigeria's potential to lead Africa's green energy revolutionNigeria eyes $122 billion investment with approval of electricity plan^[3]. Projects like LNG Train 7 and domestic pipeline expansions are attracting capital from global energy firms seeking to align with net-zero goals. Meanwhile, the $122.2 billion investment target for 2024–2045, supported by partnerships with the World Bank and African Development Bank, underscores the sector's long-term appealNigeria eyes $122 billion investment with approval of electricity plan^[3].

Challenges and the Path Forward

Despite these positive developments, challenges persist. Security concerns in oil-producing regions and infrastructure gaps remain barriers to sustained investment. Global geopolitical factors, such as U.S. tariff policies, could also impact future inflowsNigeria eyes $122 billion investment with approval of electricity plan^[3]. However, the government's commitment to decentralizing power management—evidenced by granting 11 states regulatory authority under the Electricity (Amendment) Act 2024—signals a proactive approach to addressing these issuesNigeria eyes $122 billion investment with approval of electricity plan^[3].

Conclusion

Nigeria's energy sector liberalization is creating a fertile ground for strategic M&A and foreign capital inflows. The combination of regulatory clarity, fiscal incentives, and a diversified energy strategy positions the country as a key player in Africa's energy transition. While challenges remain, the government's reforms and the private sector's agility suggest a trajectory of sustained growth. For investors, the window of opportunity is widening—one that demands both foresight and agility to capitalize on.