13 years after, Nigeria’s power privatisation has failed the people

When Nigeria privatised the power sector in 2013, the move was celebrated as the beginning of an electricity revolution. Nigerians were promised stable power supply, massive private investment, modern infrastructure, efficiency, and an end to the darkness that had crippled homes and industries for decades. Thirteen years later, Nigeria still runs largely on generators. The […]

When Nigeria privatised the power sector in 2013, the move was celebrated as the beginning of an electricity revolution. Nigerians were promised stable power supply, massive private investment, modern infrastructure, efficiency, and an end to the darkness that had crippled homes and industries for decades.

Thirteen years later, Nigeria still runs largely on generators. The reform that was presented as the cure to the country’s electricity crisis has instead exposed one of the greatest policy failures in Nigeria’s economic history. Billions of dollars have entered the sector. Tariffs have risen repeatedly. Yet power supply remains unreliable, industries continue to bleed from energy costs, and millions of Nigerians still live in darkness.

The tragedy is not simply that the reform failed to achieve its goals. The bigger tragedy is that many of the warning signs were visible from the beginning.

The privatisation exercise was supposed to follow strict international standards. The companies bidding for the Distribution Companies (DisCos) and Generation Companies (GenCos) were expected to demonstrate financial strength, technical competence, and proven experience in managing electricity assets. The reform blueprint also contained performance targets, investment obligations, and periodic reviews meant to ensure accountability.

On paper, it looked perfect. In practice, however, many of the so-called investors lacked both the technical capacity and financial muscle required to run such critical infrastructure. Several winners of the privatisation exercise were politically connected entities with little or no experience in electricity management. Some relied heavily on borrowed funds simply to acquire the assets, leaving little capital for actual investment after takeover.

The result was predictable. Instead of modernising infrastructure, many DisCos merely inherited obsolete government equipment and continued business as usual. Transformers remained overloaded. Transmission lines deteriorated further. Metering gaps widened. Consumers continued to endure estimated billing while operators complained of low revenues.

The reform became less about transforming power supply and more about transferring public monopolies into poorly regulated private monopolies.

One of the biggest failures of the privatisation process was weak regulatory enforcement. The original agreements reportedly allowed for performance reviews every five years. Operators that failed to meet investment and service obligations were supposed to face sanctions, restructuring, or outright revocation of licenses.

But enforcement remained weak, selective, and politically compromised. Companies that consistently failed to improve service delivery continued operating with little consequence. In many countries where electricity reforms succeeded,  such as India, Brazil, and parts of Eastern Europe , regulators enforced strict compliance. Investors who failed to meet technical and financial obligations were either penalised heavily or stripped of their licenses altogether.

Nigeria failed to show such discipline. Instead, government repeatedly intervened to rescue failing operators through bailouts, subsidies, and financial support schemes, effectively socialising losses while consumers continued paying higher tariffs for poor service.

The irony is painful: privatisation was meant to reduce government dependence, yet government still shoulders much of the sector’s financial burden.

Another structural flaw was the partial nature of the reform itself. While generation and distribution were privatised, transmission remained under government control through the Transmission Company of Nigeria (TCN). This created a dangerous disconnect in the electricity value chain.

Power generated cannot reach consumers efficiently if transmission infrastructure remains weak. Nigeria’s transmission grid continues to collapse with alarming regularity. Capacity constraints, outdated infrastructure, vandalism, and technical inefficiencies have turned transmission into the weakest link in the chain.

In simple terms, Nigeria privatised one part of the problem while leaving another critical part trapped in bureaucracy and underinvestment.

The sector also suffers from a chronic liquidity crisis. Millions of consumers remain unmetered. Electricity theft and illegal connections are rampant. Revenue collection remains poor. DisCos complain they cannot recover enough money to maintain operations, while consumers accuse them of extortion through estimated billing. This toxic relationship has destroyed public trust.

Many Nigerians no longer see electricity bills as payment for service rendered but as legalised exploitation. It is difficult to build a sustainable electricity market when both operators and consumers distrust each other.

Government interference has further complicated the crisis. Electricity pricing in Nigeria is trapped between politics and economics. Operators argue that tariffs are too low to sustain investment, while consumers insist they are already paying too much for darkness. Both sides are right.

The truth is that Nigeria’s power sector was privatised without first solving its structural weaknesses. The country attempted to build a market-driven electricity system on a foundation weakened by corruption, weak institutions, policy inconsistency, poor infrastructure, and political interference.

Corruption remains central to the sector’s troubles. Allegations of contract inflation, regulatory compromise, diversion of intervention funds, and opaque transactions continue to trail the industry. Instead of becoming a symbol of efficiency, the sector has become a black hole consuming public funds with little visible improvement. Meanwhile, the economic consequences are devastating.

Manufacturers spend fortunes powering factories with diesel generators. Small businesses collapse under rising energy costs. Households spend huge portions of their income on fuel, inverters, and alternative power sources. Nigeria’s dream of industrialisation remains crippled by unreliable electricity. No serious economy can compete globally while depending on generators as a primary energy source.

The painful reality is that Nigeria did not merely suffer a failed privatisation. It suffered a badly executed privatisation. Privatisation itself is not the problem. Around the world, electricity reforms have succeeded where transparency, competence, regulation, and accountability were allowed to work. The privatisation of Nigeria’s telecommunications sector remains a strong example. Investors in telecoms were subjected to clearer technical standards, stronger financial scrutiny, transparent licensing conditions, and firmer regulatory oversight. Companies that entered the telecoms market came with proven operational experience, substantial capital, and modern technology. The regulator maintained relative consistency, allowing competition and investment to flourish. The result was explosive growth.

Today, Nigerians can communicate from almost every village in the country because the telecoms reform was built on competence, regulation, and investment discipline. The power sector lacked those same foundations.

What Nigeria needs now is not cosmetic reform but a complete reset of the electricity sector. That reset must begin with a forensic review of the entire privatisation process and the original performance agreements signed with investors. Distribution companies that have consistently failed to meet investment obligations should face restructuring, mergers, or outright revocation of licenses. The era of endless extensions and excuses must end.

Nigeria must also overhaul its regulatory institutions. Regulators must be insulated from political pressure and empowered to enforce compliance without fear or favouritism.

Transmission infrastructure requires emergency-scale investment and modernisation. Without a strong national grid, increased power generation means nothing.

The metering crisis must be solved aggressively to eliminate estimated billing, improve revenue collection, and rebuild public confidence.

Government must also stop the dangerous illusion that every state can independently regulate and manage electricity markets successfully. Many state governments cannot provide basic services such as clean water, quality public schools, or efficient local infrastructure. Fragmenting the electricity market without strong technical and financial capacity at state level, risks creating multiple layers of regulatory confusion, policy inconsistency, and localised failure.

Electricity is too strategic to be reduced to political experimentation. Nigeria requires a strong national electricity framework with competent regulation, coordinated infrastructure planning, and serious long-term investment.

The urgency of fixing Nigeria’s electricity sector has become even greater under the African Continental Free Trade Area (AfCFTA), which offers Nigerian businesses access to a market of over 1.4 billion people. However, no nation can compete effectively in a continental free trade regime without affordable and reliable electricity. Nigeria possesses abundant energy resources that, if properly harnessed, could provide one of the lowest electricity generation costs in Africa. Beyond natural gas and hydropower, policymakers must seriously consider a strategic combination of coal and solar energy. Nigeria’s vast coal deposits can provide dependable baseload power for industries, while the country’s enormous solar potential, particularly in the northern states, can deliver clean and affordable electricity on a large scale. A balanced coal-and-solar strategy would strengthen energy security, reduce dependence on imported fuels, support industrialisation, and position Nigeria to take full advantage of the opportunities presented by AfCFTA.

Finally, the sector requires leadership driven by competence rather than patronage. Thirteen years after privatisation, Nigerians are still waiting for the electricity revolution they were promised. What was presented as a bold economic reform has largely become a cautionary tale of weak regulation, political interference, and elite capture.

The time has come to admit that the reform, as currently structured, has failed and that only courageous restructuring, accountability, and genuine political will can rescue the sector from permanent collapse.

 

Dr. Saleh is the Chairman Long-term Solution for Destitute initiative