By Magnus Onyibe
A Flawed Privatization Process
The unbundling of Nigeria’s power sector began in 2005 under President Olusegun Obasanjo, with Vice President Atiku Abubakar leading the initiative and Nasir El-Rufai overseeing it as Director General of the Bureau of Public Enterprises (BPE). The process continued under President Goodluck Jonathan, who in 2013, further liberalized the sector by selling power assets to private investors.
However, political conflicts – particularly the fallout between Obasanjo and Abubakar towards the end of their tenure – disrupted what could have been a successful transition. Unlike the telecommunications sector, which attracted major global players like MTN and Econet during its privatization, the power sector was largely taken over by local businessmen with limited financial and technical expertise. Instead of industry giants like Siemens or General Electric, Nigeria’s electricity assets ended up in the hands of investors who lacked the capacity to revamp the sector.
Limited Success and Persistent Challenges
A decade after privatization, the expected improvements in power supply have not materialized. While a few DISCOs – such as Ikeja, Eko, and Abuja – have made some progress, many others struggle to remain viable. On the other hand, the generation sector has seen notable improvements, with output increasing from 4,000 megawatts to 15,000 megawatts due to investments in upgrading old power plants and new entrants like Azure Power in Edo State and Geometric Power in Abia State.
However, the biggest bottleneck remains the transmission network. Despite the increased power generation, only a fraction of the electricity produced reaches end-users due to the outdated and insufficient transmission infrastructure, which is at least 50 years old. The inefficiency of TCN – still under government control – has prevented the electricity sector from functioning optimally.
A better Approach to Power Sector Reform
Nigeria’s electricity privatization model deviates from global best practices. In many countries, the entire power supply chain – generation, transmission, and distribution – is sold to a single investor, ensuring integrated operations and accountability. In contrast, Nigeria split the sector into three separate entities, each with different operators who have varying capacities and resources. This fragmented approach has resulted in inefficiencies, with TCN becoming the weak link in the value chain.
To address this issue, Nigeria must either privatize the transmission segment to attract serious investors or adopt a more integrated approach to power sector management. Without these reforms, the country will continue to experience erratic power supply, regardless of how much electricity is generated.
Strengthening Nigeria’s Power Sector: Lessons from China and India
Nigeria’s electricity supply chain – spanning generation, transmission, and distribution – has proven to be weak, particularly at the points where these three segments intersect. This situation can be likened to a relay race where the baton handoff between runners is frequently botched, leading to inefficiencies and failures.
In more advanced economies, power companies are typically granted exclusive market zones where they generate, transmit, and distribute electricity seamlessly. However, Nigeria adopted a different approach, similar to the telecom sector, where multiple operators were licensed to handle different aspects of the power supply chain in an interconnected system. This model, while theoretically workable, has not delivered the expected results due to poor coordination and weak infrastructure.
To understand the depth of the problem, Nigeria’s power sector can be compared to a river that began to be polluted in 2005, became heavily contaminated by 2013, and now, in 2025, requires urgent purification. Instead of continuous complaints about the failures of the sector, it is time to take decisive action to remove barriers hindering generation, transmission, and distribution of electricity. Industrialization – a key driver of national development – depends on solving this crisis.
Learning from China and India
A possible way forward is to draw lessons from China and India, two countries that were once in similar power supply crises but successfully transformed into industrial powerhouses.
China’s Strategy for Electrification
China tackled its electricity challenges through a multi-pronged strategy, integrating electrification into its national development plans as part of its broader poverty eradication strategy. Key steps included:
- Infrastructure Development: The “Infrastructure to Every Village Project” ensured that electricity, roads, water, and telecoms reached rural areas.
- Stakeholder Coordination: The central government led policy formulation and investment, while provincial governments handled implementation. This coordination was critical in expanding and upgrading the national grid.
- Renewable Energy Investments: China aggressively pursued clean energy, setting a target for non-fossil energy to contribute 20% of its total energy consumption by 2025. It built mega renewable energy projects, smart grids, and hybrid high-voltage transmission lines to balance power supply across regions.
These efforts culminated in China achieving full electrification by 2015, positioning the country as the world’s leading industrial hub.
India’s Path to Energy Security
Like Nigeria, India was once a British colony and faced similar electricity shortages. However, through targeted reforms and investments, India overcame its power crisis and became an economic powerhouse. The key measures taken included:
- Institutional Reforms: – Establishment of Electricity Regulatory Commissions (ERCs) to ensure fair competition and consumer protection
– Creation of the Central Electricity Authority (CEA) to coordinate the national power system. - Policy Reforms:
– Electricity Act (2003): Unbundled state electricity boards, promoted private sector participation, and established a national grid.
– National Electricity Policy (2005): Aimed at universal electricity access, energy efficiency, and reliable power supply.
– Renewable Energy Policy: Set ambitious targets for non-fossil fuel energy sources, aiming for 40% of installed capacity by 2030. - Infrastructure Investments:
– Expansion of Power Generation: Increased capacity from 112 GW in 2005 to over 400 GW by 2022, focusing on renewable energy.
– National Grid Development Strengthened the grid to ensure efficient power transmission across the country.
Smart Grid Initiatives: Modernized grid infrastructure, improving energy efficiency and customer experience. - Financial Incentives:
– Viability Gap Funding (VGF): Government support for renewable energy projects to make them financially viable.
– Tax Incentives: Encouraged private sector investment in the power sector.
– Low-Cost Funding: Provided affordable financing for power sector projects through institutions like the Power Finance Corporation.
By implementing these measures, India scaled up its energy production from 190 GW to 400 GW, transforming itself into a global manufacturing hub. The successes of its “Make in India
