The disturbing revelation the other day by the Minister of Power, Chief Adebayo Adelabu, that over 60 per cent of manufacturing firms in Nigeria have exited the national grid, is certainly no complimentary news. At the recent unveiling of the National Integrated Electricity Policy (NIEP) and the Integrated Resource Plan (IRP) in collaboration with the United Kingdom Nigeria Infrastructure Advisory Facility (UKNIAF), the minister described power supply as a strategic driver for other critical sectors in the economy, saying President Bola Tinubu recognizes that energy was not merely a commodity, but the backbone of economic growth, job creation, industrialization, and national development. Nigeria’s power sector remains a paradox of vast potential and perpetual failure. Despite numerous reforms and billions of naira invested, electricity supply remains epileptic and unreliable, impeding industrialization and economic development. The NIEP and IRP signals yet another attempt by the federal government to chart a path toward energy stability. However, history cautions us to temper optimism with scrutiny.
A Cycle of Poor Performance
For decades, Nigeria’s power sector has been fraught with inefficiencies. Power generation remains below capacity due to issues such as gas supply constraints, aging infrastructure, and weak transmission capabilities. The Transmission Company of Nigeria (TCN) continues to struggle with a fragile grid that frequently collapses under stress, leading to nationwide blackouts. Distribution companies (Discos), burdened by technical and commercial losses exceeding 40%, are unable to deliver reliable electricity to consumers. Despite these challenges, Chief Adelabu claims that power supply grew by 35% in the last year, an assertion that remains difficult to validate against the reality of persistent outages experienced across the country.
Where Does the Money Go?
Successive governments have poured funds into the sector, yet tangible improvements remain elusive. Adelabu revealed that $32.8 billion is needed between now and 2030 to achieve universal electricity access. Of this amount, $17 billion is expected from the public sector, while $15.8 billion will be sourced from private investors. While securing funding is critical, the more pressing issue is accountability. The sector is already plagued by a staggering debt burden, with generation companies (Gencos) being owed over N2 trillion, and unpaid subsidies for 2024 alone amounting to another N2 trillion. How can the sector sustain itself when financial obligations to key stakeholders remain unmet?
The Cost of an Unreliable Grid
The consequences of Nigeria’s power crisis extend beyond the inconvenience of blackouts. More than 60% of manufacturing firms have opted out of the national grid, relying instead on self-generation. This shift has significantly increased the cost of production, driving inflation and making locally manufactured goods uncompetitive against imports. If the government is sincere about fostering industrial growth, it must prioritize not just generation but also reliability and affordability of power supply.
Band A Policy and the Cost-Reflective Tariff Debate
One of the government’s recent interventions is the Band A policy, which introduced cost-reflective tariffs for a segment of consumers. According to Adelabu, this move has led to a 70% increase in sector revenue, from N1.05 trillion in 2023 to N1.7 trillion in 2024. While this revenue growth is encouraging, the policy’s limited scope – affecting only 15% of consumers – suggests that a more holistic approach is required. As the government considers expanding cost-reflective tariffs, it must strike a balance between financial viability for investors and affordability for consumers, many of whom already struggle with high living costs.
Towards a Sustainable Future
Adelabu’s assertion that Nigeria catalyzed close to $2 billion in investments in 2023 shows some progress, but the pace of transformation remains sluggish. The minister has promised 3 million new meters in the first half of 2024 to address billing inefficiencies. However, addressing the metering gap alone will not resolve the fundamental challenges in generation, transmission, and distribution.
If Nigeria is to achieve universal electricity access by 2030, it must go beyond policy announcements and ensure concrete implementation. Government agencies, private investors, and financiers must work collaboratively to ensure that funds are utilized transparently and that infrastructural upgrades translate to measurable improvements in power supply.
Conclusion
The NIEP provides a roadmap, but Nigerians have seen many such plans come and go with little impact. The true test lies in execution. The power sector must be allowed to operate commercially while ensuring affordability for consumers. With billions already spent and more required, the question remains: will this new policy finally break Nigeria’s cycle of power failures, or will it become yet another ambitious plan that yields little progress? Only time will tell, but history warns us to remain cautiously skeptical.
