Politics
Endless Grid Failures: Why FG’s 6,000MW Power Target Remains A Dream
ABUJA — The year 2024 marked 11 years since the partial privatization of Nigeria’s power sector, a move originally aimed at attracting investments, enhancing service delivery, and resolving the nation’s chronic electricity shortages caused by government inefficiency.....KINDLY READ THE FULL STORY HERE▶
However, over a decade later, the outcomes remain underwhelming. According to World Bank data, more than 80 million Nigerians, primarily in rural areas, still lack access to electricity. With an average power generation of slightly above 4,000 megawatts (MW), the performance of the Nigerian Electricity Supply Industry (NESI) in 2024 has shown little progress, as longstanding challenges persist.
In March, the Minister of Power, Chief Adebayo Adelabu, announced a target of achieving 6,000MW generation by year’s end. Unfortunately, this goal remains unmet due to recurring grid collapses, financial instability in the sector, and a lack of strategic direction from its administrators.
N2.7 Trillion Debt Chokes GenCos
Despite an installed generation capacity of 13,000MW, the sector’s operational output raises doubts about the government and operators’ commitment to improving electricity supply. A report by the Nigerian Electricity Regulatory Commission (NERC) for Q3 2024 revealed that, with 28 power plants connected to the grid, the available capacity was only 5,100MW, while average hourly generation stood at 4,280MW.
Power Generation Companies (GenCos) attribute the decline in available capacity to a massive debt burden of N2.7 trillion owed to them. According to Dr. Joy Ogaji, Executive Director of the Association of Power Generation Companies, GenCos invoiced N1.891 trillion in 2024 but received only N396.53 billion (20.96%) in payments from the Nigeria Bulk Electricity Trading Plc (NBET) by August.
Highlighting the financial strain, Transcorp Power Chairman Tony Elumelu urged the Federal Government in May to settle the N1.3 trillion owed to GenCos to prevent a sector-wide collapse. Elumelu noted that Transcorp Power alone is owed approximately N250 billion for electricity supplied to the national grid. He also called for the full privatization of the sector, including divesting the government’s 40% stake in distribution companies and its 100% ownership of the Transmission Company of Nigeria (TCN).
“We face liquidity challenges in the sector. As it stands, power generation companies are subsidizing electricity for the country. Settling these debts is critical for progress,” Elumelu emphasized.
Sectoral Inefficiencies and DisCos’ Role
Professor Adeola Adenikinju, Director at the Centre for Petroleum, Energy Economics, and Law, University of Ibadan, expressed concern over the inefficiencies of electricity distribution companies (DisCos). He noted that despite collecting tariffs, DisCos fail to adequately compensate GenCos and gas suppliers. He urged a reduction in Aggregate Technical, Commercial, and Collection (ATC&C) losses to free up revenue for GenCos.
Electricity market analyst Lanre Elatuyi added that systemic issues in the sector’s payment model exacerbate the debt crisis. Under the central buyer model, payment guarantees tied to Power Purchase Agreements (PPAs) are not enforceable, enabling DisCos to operate inefficiently.
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