By Hamza Musa Makarfi
Generation Companies (GENCOs), long burdened by a ballooning debt now estimated at over ₦4 trillion, recently issued a stern warning to the federal government about the risk of a nationwide blackout. In what could be a defining moment for the country’s power sector, the GENCOs may have finally secured a federal commitment to resolve these debts.
If honoured, this intervention could ease short-term pressures on generation capacity. But the move raises a larger question: Will this open the floodgates for other players across the power value chain; distribution companies, gas suppliers, and transmission services to seek similar bailouts? The answer may well determine the next chapter in Nigeria’s long-running electricity saga.
Lagos Colony: Where It All Began
It all began on the streets of Lagos. Residents demanded let there be light,imagine how the streets looked over a hundred years ago. I’ll leave that to your imagination. At the time, electricity was managed by the Public Works Department, and soon, the lights came on—but only for a privileged few. Sadly, this pattern of exclusivity still echoes in today’s access to power.
Subsequent Transformations
Nigeria’s first power plant was constructed around 1923 in Ijora, on the Lagos Mainland. I have visited the relics myself and could not help but feel a deep sense of loss at the missed opportunity to harness coal more effectively. It remains an indisputable fact that many of the world’s industrial giants still use coal to fuel development, even while transitioning to cleaner energy sources.
The Ijora coal-fired plant was later joined by major hydroelectric projects like the Kainji Dam and gas-fired plants such as Egbin in Lagos and Afam in Rivers State
From those early developments to the establishment of the Nigerian Electricity Supply Company Limited (NESCO), and eventually the Nigerian Electric Power Authority (NEPA) and the Power Holding Company of Nigeria (PHCN), the evolution of the power sector tells a story marked by both ambition and chronic underperformance.
Legacy Issues
The Nigerian power sector is weighed down by systemic challenges that span the entire value chain. Decades of underinvestment have resulted in outdated infrastructure, transmission bottlenecks, and a persistent liquidity crisis. Nigerians, ever creative with language, coined acronyms to reflect their frustration: NEPA became “Never Expect Power Always,” while PHCN was sarcastically rebranded “Please Hold a Candle Now.”
Obasanjo Reforms
Under President Olusegun Obasanjo, reform efforts gained serious traction. Collaborating with the National Assembly, his administration introduced the Electric Power Sector Reform (EPSR) Act of 2005. This landmark legislation opened the door for private sector participation and eventually allowed states to generate and distribute electricity, a key amendment later achieved under the Tinubu administration.
The EPSR Act also led to the creation of key institutions like the Nigerian Electricity Regulatory Commission (NERC), which plays a role in electricity similar to the Nigerian Communications Commission (NCC) in telecoms.
Obasanjo also launched the National Integrated Power Project (NIPP), starting with eight power plants, later expanded to ten. These projects aimed to boost generation capacity and included accompanying gas infrastructure. However, despite bold ambitions and heavy investment, critics argue that the reforms fell short in delivering tangible, lasting improvements.
Yar’Adua/Jonathan Administrations
President Umaru Musa Yar’Adua approached the power sector with a spirit of continuity, though with a more measured approach, given the massive resources already deployed. Power was elevated to a national priority under his administration’s Seven-Point Agenda.
As the NIPP encountered funding hurdles, some state governments adopted proactive strategies. Notably, Kwara State, under then-Governor Bukola Saraki, completed the Ganmo transmission substation in Ilorin using state resources. I participated in showcasing the project as a highly commendable state-level leadership in complementing federal initiatives.
President Goodluck Jonathan built upon the reform framework and officially launched action plans. The Niger Delta Power Holding Company (NDPHC), under the leadership of James Olotu, earned praise for turning around the NIPP’s project management and delivery. The administration also executed the privatization of generation and distribution assets in 2013 marking a significant structural shift with high hopes for a commercially driven, service-oriented power sector.
The Buhari Administration
President Muhammadu Buhari’s administration emphasized continued engagement with power sector stakeholders and prioritized funding for the gas supply chain to stabilize electricity generation. The administration also promised to deliver the long-delayed Mambilla Hydroelectric Project expected to generate 3050 megawatts, but despite strong rhetoric, the project failed to materialize
It was one of the most important yet difficult assignments I covered—a story with many twists about the terrain, the people, and the politics surrounding the project.
Gas: The Missing Link
The gas value chain is often overlooked in public discourse, yet it remains the most critical link in sustaining Nigeria’s thermal power generation, second only to hydro, solar, and other renewables. Nigeria, endowed with vast natural gas reserves, still struggles to meet the needs of Generation Companies (GENCOs). Low pricing discourages investment in gas infrastructure, and even with the Nigerian Gas Company (NGC) in play, supply remains inadequate.
Without addressing the commercial viability of the gas sector, efforts to expand electricity generation will remain half-measures.
Revenue and Sustainability
As in any business, revenue is the lifeblood of the power sector. The customer, ultimately, the Nigerian citizen is king. But this king must pay. Revenue from consumers ensures that every actor in the value chain from gas suppliers to generation, transmission, and distribution companies can function effectively.
Timely payment for electricity services is not just about fairness; it’s the only way to keep the sector afloat. Without that flow of “Naira and kobo” the entire system begins to unravel. This is Nigeria’s electricity payment flow:
Customer
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Distribution Company (DisCo)
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Transmission Company (TCN)
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Generation Company (GenCo)
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Gas Supplier (GASCO)
Liquidity Crisis: A Mirror of the Nation’s Power Sector
Nigeria’s power sector is more than just a story of electrons and megawatts. It mirrors the nation itself, reflecting our institutional weaknesses, policy inconsistencies, and the vast gap between potential and performance. It is a chronicle of vision, reform, setbacks, and resilience.
The electric story remains unfinished. But in the hope of reforms working and reinvention, perhaps the greatest question still lingers: Who will finally finish the electric dream?