This opinion piece is a follow-up on last week’s, titled “The Limitations of a Government-Dominated Power Sector”. The limitations mentioned and discussed included limited financial resources by the government, technical and managerial limitations, slow response to climate change and decarbonisation imperatives, uncompetitive and insular mindsets due to government ownership, and implicit governance issues. This article looks at the diverse consequences of government overwhelming ownership and management of key assets of the power sector. We have for decades glossed over the effects of these consequences on the performance and growth of the power sector as if they didn’t matter. But they do, severely.
“Right from political independence up to November 2013, when the power sector was partially privatised, the power sector was fully in the hands of government officials and heavily politically influenced.”
These consequences are as follows. First, politicisation of the power sector: The very ownership and control of the power sector by the government for decades meant its politicisation. According to Magnus Eminue, an energy policy analyst at Nextier, “political influence on the awarding and managing of power sector contracts has undermined efforts to build a reliable electricity supply. From the days of the National Electric Power Authority (NEPA) to the post-privatisation era, political considerations have continued to dictate contract allocations, policy decisions, and project execution.” Right from political independence up to November 2013, when the power sector was partially privatised, the power sector was fully in the hands of government officials and heavily politically influenced. This was also very evident under the prolonged years of military rule when NEPA undertakings (present-day distribution companies (DisCos)) became major cash cows of the military regime. “The roots of political involvement in Nigeria’s power sector date back to the 1970s, when NEPA monopolised electricity services. Successive administrations maintained a tight grip on the industry, using it as a tool for political leverage. As electricity demand surged during the 1990s and early 2000s, vested political interests repeatedly undermined the government’s efforts to improve generation and distribution.” Eminue pointed out that these interests often inflated project costs and hindered reforms to professionalise the sector. Political consideration is also behind the refusal of the Buhari presidency to renew Manitoba Hydro International’s contract to manage the Transmission Company of Nigeria (TCN) that expired on July 31, 2016. And political intrigues and protection of vested interests are behind the attempts to paint the partial privatisation programme of the power sector thus far as a failed attempt. This is not an attempt to tarnish the image and impugn the integrity of the current political, administrative and technocratic leadership of the power sector but to courageously address well-known historical facts concerning the management of our power sector. These observations are corroborated by Mr Eyo Ekpo, Team Leader at UKNIAF and former Commissioner, Market Competition, NERC, in his May 12, 2025, article in Business Day, titled “National Integrated Electricity Policy 2024 and Road to Attaining Energy Security in Nigeria”. He mentioned, among others, “…deliberate bureaucratic delays, weak accountability and M&E mechanisms and indifferent political support to drive the firm and sustained implementation of agreed reforms.”
Second is the weak and inadequate power sector: with about 6,000 megawatts (MW) of electricity generated from fewer than 30 power plants, transmission capacity that can wheel only about 8,000 MW and distribution capacity that can carry only about 6,000 MW, Nigeria, with a population of 230 million people, is serviced by a very inadequate and weak power infrastructure. This is the direct result of decades of government ownership and management and unwillingness to let go of the sector.
Third, poor performance and perennial power crises: The Nigerian power sector has historically suffered from poor investments, insufficient gas supply, and weak infrastructure, leading to decades of poor performance and energy crises. The power supply benchmark for industrialised economies is one MW of power generation for one million people. But assuming half a megawatt or 500 kilowatts (kw) per one million people for our level of development for 230 million people, that works out to 115,000 mw or roughly 100,000 mw, which corresponds to the amount of energy Prof. Barth Nnaji, former Minister of Power and promoter of Geometrics Power Aba, estimates to be Nigeria’s current power needs. This is against the current grid-transmitted power of about 6000 MW. Thus, gross undersupply is at the root cause of Nigeria’s perennial power crisis.
Fourth, de-industrialisation/closure of industries: Energy crises have been a key factor for the closure of factories in Nigeria for decades but not the only reason. Major examples include the closure of the Volkswagen (VW) assembly plant in 1989/1990 and Dunlop and Michelin tyre factories in 2007 and 2008, respectively. Deindustrialisation has been going on since the 1980s, only further accentuated by the recent foreign exchange crisis which saw the exit of major multinational manufacturing firms. However, the entry of major indigenous Nigerian manufacturers like Dangote Industries and BUA in the last two decades has revived the contribution of manufacturing to the nation’s gross domestic product (GDP), declining first from 10 percent of GDP in 1990 to 6.5 percent in 2010 and steadily rising to 13.56 percent in the third quarter (Q3) of 2020. This remarkable performance was largely the result of self-generated power by major manufacturers rather than improvement in power supply.
Fifth, uncompetitiveness of Nigerian exporters and narrow export base: Power crises as a result of a weak and poorly performing power sector, due largely to public sector ownership and control, have led to the uncompetitiveness of Nigeria’s manufactured exports and exports generally. For example, Nigeria for decades was not able to take advantage of the Africa Growth and Opportunity Act (AGOA), a US government preferential trade programme meant to encourage duty-free imports into the United States from African countries. South Africa, Kenya, Madagascar, Lesotho, and Ghana dominated the non-oil AGOA exports, while Nigeria could only export oil and gas.
Finally, import dependency/dollarisation syndromes: Nigeria’s high cost of local manufacturing, due essentially to poor power supply and the high cost of self-generation, has led to an import-dependency syndrome and a preference for imported goods, which has in itself reinforced the dollarisation syndrome as a result of a high demand for dollars to pay for our inordinate demand for imported goods.
This has been an attempt to highlight some of the major consequences of the dominant public sector’s hold on the power sector. Admittedly, sentiments against the full privatisation of the power sector across the public sector and labour movement remain strong, either due to lack of adequate knowledge or vested interests, but the full privatisation of the power sector is inevitable, and the earlier the better and the less costly.
Mr Igbinoba is Team Lead/CEO at ProServe Options Consulting, Lagos.
