Power sector: More reforms, little impact

It has been three years since President Bola Ahmed Tinubu promised to fix the electricity sector. In fact, he said if he doesn’t fulfill that promise, Nigerians should not vote him back into office. With a year to the expiration of his four-year tenure, many say that he is yet to keep the promise. Nigeria’s […]

It has been three years since President Bola Ahmed Tinubu promised to fix the electricity sector. In fact, he said if he doesn’t fulfill that promise, Nigerians should not vote him back into office.

With a year to the expiration of his four-year tenure, many say that he is yet to keep the promise.

Nigeria’s power sector has since independence defied odds of experts and governments’ intervention to ensure citizens enjoy constant electricity supply.

The sector’s myriad problems have defied reforms by both government and private companies.

• Tinubu’s toughest battle remains security
• 3 years after ‘subsidy is gone’: The real balance sheet of Tinubu’s reforms

This is despite the government pumping billions of naira into the sector with no commensurate results.

But expert have warned that the sector won’t see the desired change if the government is not ready to take drastic measures against Electricity Distribution Companies (DisCos), citizens vandalising electricity installations and electricity theft.

 

Electricity Act yet to make difference

One of the first executive actions of the president when he resumed office in 2023, was signing into law the 2023 Electricity Act that removed power sector from exclusive list into concurrent list.

This was to allow state governments to play active role in the sector and allow multiple market players against the monopoly electricity Distribution Companies (DisCos) enjoy in their franchise areas.

It also allowed for the breakup of the Transmission Company of Nigeria (TCN) into two, enabling efficiency by allowing the Nigerian Independent System Operator (NISO) to manage interconnectivity on the grid while the TCN operates the infrastructure.

Experts hailed the signing of the act as a watershed moment for the country as it would enable competition in the electricity market and rescue Nigerians from the epileptic supply of power that they have grown to live with.

Three years later,  only 15 states have adopted the Act. It has also led to standoff between state regulatory agencies and DisCos as the former try to interfere in tariff fixing.

Though some states have announced investment to construct power plants, the number of years they will take to be completed is uncertain for residents to enjoy their benefit.

 

N700bn, yet millions remained unmetered

The government last year approved the sum of N700bn for the provision of meters through the President Meter Initiative.

The fund, which was deducted from the Federation Account, was meant to provide two million meters for Nigerians and was expected to complement the 3.2 million meters being procured through the World Bank’s Distribution Sector Recovery Programme (DISREP).

While the meters under DISREP are currently being disbursed, that of the PMI is yet to start, a year since it was announced.

The inability to distribute the meters has left more than six million electricity customers unmetered.

Many analysts say that the power sector suffers from the lack of a professional at the head. The president has favoured individuals with finance background over engineers with technical know-how of the power sector.

First, it was Adebayo Adelabu, a former Deputy Governor of the Central Bank of Nigeria and then Joseph Adejinmi Tegbe, who even though obtained his first degree in civil engineering, has worked throughout as an accountant and taxman.

While Tegbe is yet to assume office after being cleared by the Senate, under Adelabu, who resigned to contest for the governorship of Oyo State, Nigeria witnessed an increase in deployment of  renewable energy, especially solar, for those not on the national grid.

True to his background, the minister has his voice to the removal of subsidy from the sector arguing that its continuous presence was only amounting to bills the government could not foot. This has resulted in trillions of debts that prevented adequate investment in the sector.The removal of the subsidy saw a steep tariff increase for Band A customers.

 

Multiple grid collapse

The year 2024 would be remembered in the power sector as a bad one for the national grid. The grid faced multiple challenges of vandalism, sabotage and aging infrastructure.

These challenges forced the nation into blackout several times, the most notable was the 17 states in the north experiencing blackout for 14 days owing to bandit attack on the Shiroro – Mando transmission line. The back-up plan to produce electricity to the affected states was also knocked down.

There were at least four cases of transmission stations going up in flames due to old infrastructure in the network while the activities of vandals plunged residents of Bayelsa State into four months of blackout during the year.

Also, 2025 saw the collapse of the grid on four occasions, leaving several cities in darkness. This year, the grid has experienced collapse on two occasions. The two came within a week of each other fuelling calls for a rejig of the grid.

However, the country was able to record milestones in available power generation during the period under review with available power peaking 6,000 megawatts.

This is all thanks to the supply of mobile substation to the country from the Siemens project the previous administration entered into and the coming on stream of the 700 megawatts hydroelectric power plant.

 

Exorbitant Band A

The government in 2024 declared the removal of subsidy on electricity customers on Band A, those; who get 20 to 24 hours of electricity supply.

The government argued the move was necessary to free up scarce resources to fund other important projects and that those in the bands are rich Nigerians who can afford extra cost to power their homes.

But the increased tariff did not translate into constant supply as customers under the band complained of not getting the minimum supply of 20 hours mandated by the Nigerian Electricity Regulatory Commission (NERC).

While NERC had on several occasions downgraded customers to lower bands due to DisCos not meeting supply target, customers said the actions is not commensurate, thus refund should be the punishment.

This policy has made the remaining bands to be less prioritised as they grapple with low supply.

The government incurred over N2 trillion debt as subsidy payment to utility companies in the sector from 2024 to mid-2026 and another N2 trillion as legacy debt, making the sum to cross N6 trillion. This debt has led to friction with the government and the electricity Generation Companies (GenCos).

Another problem is government’s indebtedness to gas suppliers. Nigeria’s bulk electricity is being generated through gas-powered turbines. Gas suppliers, in February, cut supplies to make a case for the payment of the money being owed. This led to closure of some of the plants.

Government has made efforts to reduce the debt with a N500 billion bond issued to owners of electricity generation plants.  But the pay-out is fraught with controversy as the government reduced the debt to N3 trillion from N6 trillion, which they said was done without their inputs.

 

Enter ad-hoc agencies

Apart from NISO, the Tinubu administration created the Presidential Metering Initiative (PMI), Generation Assets Management Company (GAMCO) and Presidential Task Force on Power Sector Reset and Restoration.

All the quasi-agencies were created through presidential order and have overlapping functions with existing agencies.

Experts have said their existence will not solve the structural issues affecting the sector but create more problems where money will be siphoned.

Speaking with Daily Trust, the  Managing Director of New Hampshire Capital Ltd and energy expert, Odion Omonfoma, said the agencies were given  mandates that touched sector reset, commercial viability, revenue assurance, tariff integrity and growth zones.

He said these are not minor administrative matters as they go to the heart of the national electricity policy.

On the creation of taskforce, he said the Electricity Act already places federal policy leadership in the hands of the minister.

“If the Task Force begins to define policy outside the ministry, the country may end up with two policy centres: one statutory and one presidential.”

“The second area is regulatory independence. Tariff integrity, market discipline, licence enforcement, consumer protection and cost-reflective pricing are regulatory matters under NERC and State Electricity Regulators.  The presidential task force may identify regulatory failures needing urgent reforms and recommend action, but NERC/SERCs must remain the body that makes regulatory decisions through lawful procedure. Otherwise, a reform designed to restore discipline could create a new ground for litigation, investor anxiety and regulatory disorder.”

On his part, Prof. Dayo Ayoade, an energy law expert at the University of Jos, said the signing of the 2023 Electricity Act 2023 was an important success in terms of putting a new legislative framework in place after the 2005 Act.

He noted that it created the scene for big changes in the industry with the decentralisation of the power sector to allow states to generate, transmit, and distribute electricity without the involvement of the federal authorities as a major milestone.

He added that another success for the administration is increased government spending in terms of ensuring better metering of the public because the whole issue of estimated billing has destroyed public confidence in the power sector.

He, however, said  despite these reforms, Nigerians still don’t have reliable power with the 5,000 megawatts available.

“After three years of President Tinubu who had promised to solve the problem we are still where he started. And there’s also the issue of payments of debts. While the government has started paying, it is still an ongoing issue. What can government do to make it better? The biggest problem has been governance, and governance continues to remain a challenge for the power sector.”

“If President Tinubu wants this power sector to work, not through the creating of new institutions, he has to take the bull by the horn by dealing with the poor governance in the power sector. No amount of innovative policy, new laws or investments will change anything.”

“I also think the biggest problem is that we don’t seem to have a properly planned way of doing things. Now, the Electricity Act allowed state governments to come into the power sector but nobody went to do any intensive analytical work to see how the federal and the state will relate. It’s only now that we are inching back and forth as we see the problems”, he said.