Power Sector Reforms: More Cash Less Electricity

The federal government’s reforms in the power sector seem to be improving the financial fortune of the sector as shown in the 78.16 per cent year-on-year growth in its contribution to GDP, but supply has not significantly improved for many Nigerians.

Though the narrative may have been twisted and coined to a more technical euphemism to ‘increase in power generation (megawatts, MW), power station rehabilitation’, among others, to the average man on the streets, such does not amount to anything relevant.

This may be quite worrisome as Nigerians are constantly turning into ‘pseudo mathematicians’ at the end of the months when bills are presented and power supply is still nothing to write home about.

Today, the country’s power sector, though a viable one, is replete with inefficiencies and challenges, with attendant negative impacts on economic development in urban and rural areas within the country even as the government pulls all strings to ensure improvement in the sector.

With more than half of the Nigerian population estimated to be lacking access to electricity, the national grid’s daily generating capacity of four gigawatts (GW) clearly falls short off the mark in meeting the country’s energy needs.

Also, the current pricing of the electricity tariff is not reflective of the generation, transmission and distribution costs.

The latest report by the Emerging Africa Capital Limited, EAC Group, cited that to most Nigerian entrepreneurs, inconsistent power supply is the most significant obstacle to doing business with average monthly power outage of the average business owner cited as 239 hours.

To this end, the Power Sector Recovery Programme, PSRP, estimated an annual economic loss of over $25 billion due to lack of constant supply of power.

These challenges compound the problems of access to food, potable water, lighting, healthcare, education, information and other basic amenities.

According to the power sector  transformation, the  implementation of  the first phase of the plan  is aimed at achieving 25,000 megawatts by 2025. Electricity is the element  of   infrastructure for economic growth and development of the nation to survive in this contemporary digital era.

To optimise the current generation capacity, planning becomes pivotal, taking into cognizance the gestation period for power development. There is a need for massive investment in transmission and distribution networks in the country. Power Generation Companies (GENCOs) have the capacity to increase their output in the near term. However, an increase in power generation without a resultant increase in Transmission Company of Nigeria (TCN)’s wheeling capacity and improved distribution infrastructure will continue to lead to stranded power generation.  Nigeria has about 13,000 (MW) of installed capacity, a transmission capacity of about 5,000MW and distribution that hovers between 3,500 and 4,200MW.

Frustratingly, the unprecedented growth recently recorded by the sector has not necessarily translated to an increase in the  supply of electricity. Indeed, the nation’s electricity grid has already recorded two collapses in 2022 alone, and this makes plain the significant challenges still being faced by the sector, and the urgent need for investments and improvements of the electricity need to be done.


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