There are significant systemic issues in Nigeria’s power sector that demand urgent attention. Just last week, for the eighth time this year, the national grid collapsed, leaving the entire country in darkness. The Transmission Company of Nigeria (TCN) and the Nigerian Electricity Regulatory Commission (NERC) attributed this latest blackout to a transformer explosion at the 330kV Jebba Transmission substation. In response, NERC has announced plans to hold a public hearing to investigate both the immediate and underlying causes of these recurring grid failures and widespread outages. However, these frequent collapses only highlight ongoing concerns about deep structural flaws in the sector.
It’s becoming increasingly apparent that the authorities in charge are struggling to stabilize the power grid, efficiently transmit generated power, and put an end to the chronic collapses we see. In the past, officials would often blame these grid failures on the lines’ inability to handle the output from generating companies (GenCos). At times, vandalism of key transmission infrastructure was cited. Yet, there are more fundamental issues at play, including a range of perverse incentives within the system and regulatory weaknesses.
It’s unfortunate that a decade after the privatization of the power sector, many Nigerians now believe that the successful strategies applied by countries like India and Singapore to tackle their own electricity challenges are just out of reach for us. Instead of consistently generating, transmitting, and distributing sufficient electricity for homes and businesses, we are met with excuses from our leaders. To this day, the distribution companies (DisCos), which were supposed to benefit from the reform of this beleaguered sector, have failed to invest in modernizing and expanding the transmission lines. And it’s worth noting that the generation companies (GENCOs) have not performed any better.
A report from last year by the World Bank positioned Nigeria as the world’s poorest country in terms of power supply, revealing that 85 million citizens remain unconnected to the grid, resulting in an annual loss of $26 billion. With many households forced to produce their own electricity, Nigeria stands as one of the most challenging environments for doing business globally. The lack of reliable electricity has restricted access to vital services such as healthcare and education and has hampered economic opportunities for many Nigerians. Small and medium-sized enterprises have been severely impacted by the high costs of self-generating power, and even larger manufacturers are grappling with the ramifications of energy poverty, which affects every sector of the economy.
Former Minister of Power, Bart Nnaji, has urged the federal government to restart the signing of Power Purchase Agreements (PPAs) with private investors to boost electricity generation in Nigeria. He pointed out that while Nigeria has a nameplate capacity of about 13,000 megawatts, it currently generates only around 5,000 MW. This shortfall is due in part to inadequate natural gas supplies for the country’s gas-fired plants, which produce 80% of the electricity for the national grid.
Experts suggest that the reluctance of major private investors to engage with Nigeria’s power sector is not solely about a lack of available funds. Instead, it often stems from concerns over transparency and accountability. As we’ve noted before, any country that aims for sustainable socio-economic development cannot ignore the necessary reorganization of the highly dysfunctional TCN.
The frequent collapses of the national grid serve as a wake-up call, revealing the serious systemic issues throughout the power value chain that require immediate action. The federal government must collaborate with key stakeholders in the sector to find viable solutions. Addressing the challenges facing the power sector will demand more than superficial fixes.
