Rescuing Nigeria’s power sector

NIGERIA’s power sector is not failing for lack of policy. It is failing for lack of discipline. Subsidies are used to replace accountability. Debts replace actual payments. And trust, the one thing that holds everything together, remains missing. That is unbelievable. And yet, beyond the numbers and the policies, there is something deeply human about electricity. It is not just wires and megawatts; it is the difference between a child reading at night and sitting in darkness. It is the difference between a small business surviving and shutting its doors for good. That is why, even though the sector is often discussed in technical jargon, it is really a story about people: about us.

For many years, electricity in Nigeria was in the hands of one government body. First ECN, then NEPA, and later PHCN. One institution did it all: generation, transmission, and distribution. When it worked, the country had light. When it struggled—and it struggled a lot—the whole nation felt the darkness. By the early 2000s, however, it had become obvious that this model could not continue. Power became unreliable. Infrastructure was weak and overstretched. Investment could not keep pace with a growing population and economy. Simply put, the system could no longer carry Nigeria’s ambitions. So in 2005, under the Electric Power Sector Reform Act, the unbundling of PHCN was initiated. Consequently, in 2013, privatisation was finalised and PHCN dissolved. Generation Companies (GenCos) were created to produce power. The Transmission Company of Nigeria (TCN) handles moving it across the country. Distribution Companies (DisCos) deliver to homes and businesses. The Nigerian Electricity Regulatory Commission (NERC) was set up to set rules, issue licences, and ensure fairness.

The idea was straightforward: bring in private capital and efficiency, while government retains control of strategic infrastructure like transmission. On paper, it looks clean. GenCos generate electricity. The Nigerian Bulk Electricity Trading Plc (NBET) buys it under Power Purchase Agreements, paying for availability (capacity charge) and actual output (energy charge). NBET sells to DisCos. DisCos sell to the consumers. Money is supposed to flow back the same way: consumers pay DisCos, DisCos pay NBET, and NBET pays GenCos. But in reality, this is where it all begins to fall apart. Many homes and businesses are not metered. Others do not trust estimated billing. Some do not pay at all. Others bypass the system completely through illegal connections. Because of this, DisCos recover far less than they should: sometimes only 30–40 percent of expected revenue. With collections that weak, they can’t fully pay NBET. And when NBET is not paid, GenCos receive only a fraction of what they are owed.

That is how the debt has ballooned. As of February 2026, it is hovering around ₦6–6.5 trillion (with some reports pushing toward ₦6.6 trillion by month-end), up from about ₦4 trillion at the end of 2024. To prevent total collapse, the government steps in, quietly but heavily: through subsidies, intervention funds, and Central Bank support. Billions are injected to cover the tariff shortfall, because the price Nigerians pay is often lower than the real cost of generating and delivering power. In effect, government bridges the gap. So, Nigerians are already paying twice: once through bills, and again through taxes and public debt that fund these endless bailouts. Yet the subsidies have not fixed anything. They are not targeted. They do not reward efficiency. They do not enforce discipline. They simply keep a broken system limping along. Losses persist. Inefficiencies drag on. Non-payment goes largely unchecked.

There is also an uncomfortable truth at the centre of this problem: government itself is one of the biggest debtors. Ministries, departments and agencies owe huge bills, further weakening the entire chain. Reform, therefore, cannot start with citizens alone. Government must lead by example. One practical fix is straightforward: deduct electricity costs at source from budgetary allocations, especially for critical institutions like military installations. National security should not be left hanging on a system that is already fragile. At the heart of the crisis are the DisCos, the financial backbone of the sector. Many are undercapitalized and lack real technical know-how. Privatization changed ownership, but it did not always bring capacity. Government now has to face this reality squarely.

For the system to survive, DisCos need recapitalisation and restructuring. Real investors with deep pockets and genuine expertise must come in. But even that is not enough. Money alone will not solve the problem. Discipline will. Nigeria’s power crisis is not just a failure of privatisation, it is a failure of discipline across the entire value chain. That failure of discipline is evident in everyday practices. Energy theft remains rampant, often enabled by insiders. Illegal connections and bypasses are not just consumer tricks; sometimes there is collusion within the system itself. This requires firm and consistent action. A proper whistleblower framework must be introduced: one that protects and rewards those who expose corruption. When honesty pays, enforcement becomes real. At the same time, metering must accelerate. Estimated billing has destroyed trust. People resist paying not necessarily because they are unwilling, but because they feel the system is unfair. Trust cannot be forced. It has to be earned.

Beyond distribution, transmission remains the most sensitive link in the entire system. If a GenCo fails, one area loses power. If a DisCo fails, the impact is local. But if transmission fails, the entire grid can collapse. That is why it remains under government control. However, control should not mean stagnation. Nigeria’s grid is weak: it cannot even carry all the power that is generated. The solution is not to shut it down, but to build alongside it: a hybrid network where new, higher-capacity lines run parallel to the old ones. Upgrades must happen gradually, without triggering nationwide blackouts. Nigeria’s problem is not just generation; it is transmission that actually works.

Even generation itself is constrained by another critical issue: gas supply. Most GenCos depend on gas, but pipeline vandalism, pricing disputes and supply disruptions continue to limit output. Without stable gas, improved generation will remain out of reach. And yet, in Nigeria, a vacuum never stays empty for long. Where the grid fails, alternatives emerge: and in this case, they come in the form of private generators. We all know that sound: the deafening, nightly chorus across Abuja and every major city. That reality exposes a deeper contradiction. Millions of Nigerians run generators every night, spending far more on diesel and petrol than they would on reliable grid power. Yet there is strong resistance to cost-reflective tariffs. Electricity is treated as a social good, rather than an economic product: which, in practice, it is.

This is where Nigeria diverges from more stable systems. In countries like the US or UK, according to information from Open Source, power is priced to cover costs. Contracts are enforced. Payments are expected. Weak players are allowed to fail. In Nigeria, tariffs are politicised. Contracts are bent. Struggling operators are propped up. That contradiction sits at the core of the crisis. There is also something rarely said openly: the economics of darkness. The generator market is worth billions. Importers, fuel suppliers and technicians all benefit from unreliable grid power. It would be unfair to accuse everyone, but it would be naïve to ignore the incentives. Where dysfunction creates profit, reform will inevitably face resistance. Government must tighten oversight and actively protect infrastructure from sabotage.

Against this backdrop, power sector workers under NUEE and the NLC are threatening action. They feel short-changed, especially in the face of repeated grid collapses and the absence of lasting solutions. NLC has issued “final warnings” and spoken of a possible showdown over the failures of privatization, even rejecting large bailout proposals:  describing GenCos’ ₦6 trillion-plus claims as a “heist” and opposing any ₦3 trillion settlement. The workers’ concerns are real. However, the solution cannot be a reversal of privatisation. That chapter is closed. Government met its obligations at the time. Reopening it now would be legally complex and risks dragging the sector back to old inefficiencies. A full strike or shutdown would only make matters worse. The system is already operating on limited capacity. A collapse of the grid would push homes, hospitals and businesses into even deeper hardship.

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What is needed is not a return to the past, but disciplined progress. Government must be transparent about subsidies and debts. DisCos must be strengthened and held accountable. Transmission must be expanded intelligently. Gas supply must be secured. Consumers must be treated fairly, with proper metering and honest billing. Above all, the sector needs consistent governance: something Nigeria has chronically lacked.

Electricity cannot survive on sentiment or political convenience. It runs on the hard logic of discipline. And ultimately, this is not just an infrastructure crisis. It is a crisis of trust: whether citizens believe the system is fair, whether investors trust contracts signed in government offices, and whether leaders have the courage to enforce difficult decisions today for a better tomorrow. Electricity is not just infrastructure; it is a test of national honesty. And until government, operators, and citizens all accept responsibility, darkness will remain Nigeria’s most faithful companion.