Nigeria Deepens Power Sector Reforms for Stable Electricity Supply

Federal Government Intensifies Power Sector Overhaul

The Nigerian Federal Government has significantly intensified its reforms within the power sector, with the overarching goal of delivering stable and reliable electricity supply to both industrial clusters and households across the nation. These efforts are being spearheaded under President Bola Tinubu's Renewed Hope Agenda, as confirmed by Minister of Power, Adebayo Adelabu. The reforms encompass a multi-pronged approach, addressing legislative frameworks, financial stability, infrastructure development, and operational efficiency.

Legislative and Strategic Initiatives Driving Change

A cornerstone of the current reform drive is the Electricity Act 2023, which replaced the Electric Power Sector Reform Act of 2005. This landmark legislation facilitates the decentralization of Nigeria's electricity generation, transmission, and distribution, allowing states to establish their own electricity markets. The government is also implementing several key initiatives:

• Presidential Power Initiative (PPI): This program aims to enhance transmission capacity and grid stability. Phase Zero has already achieved over 700 megawatts of additional transmission capacity, with Phase One projected to add 7,000 megawatts of operational capacity through partnerships with companies like Siemens Energy, CMEC, Elswedy Electric, and Power China.
• Light Up Nigeria Project: Led by Vice President Kashim Shettima, this initiative focuses on providing stable electricity to critical industrial hubs. Operations have already been launched in areas such as Agbara, Lagos State, and Enugu State.
• Presidential Metering Initiative (PMI): Approved in November 2023, the PMI seeks to close the national metering gap by deploying over 5 million smart meters and ancillary technologies by 2027. This initiative, backed by ₦700 billion from FAAC and supported by the World Bank's DISREP program, aims to reduce energy losses and improve revenue assurance.

Financial Stabilization and Market Reforms

To address long-standing financial challenges, President Tinubu has approved a ₦4 trillion bond to clear verified debts owed to power generation companies (GenCos) and gas suppliers. This measure is intended to stabilize the market and restore confidence in the sector. Furthermore, the introduction of cost-reflective tariffs for select consumers has begun to yield positive results, improving market liquidity and enhancing supply reliability. Industry revenue reportedly increased by 70 per cent to ₦1.7 trillion in 2024, with projections exceeding ₦2 trillion for 2025. A targeted subsidy framework is also under development to protect vulnerable households.

Progress and Future Outlook

These reforms have contributed to an increase in Nigeria's average power generation, which rose to approximately 5,300 megawatts in 2024 from 4,200 megawatts in 2023. This improvement is partly due to the rehabilitation of Niger Delta Power Plants and the integration of the 700MW Zungeru Hydropower Plant. The government is also exploring international funding, including discussions with China's EximBank for a $2 billion loan to build a new 'super grid' connecting industrial regions. While challenges such as infrastructural gaps and financial unsustainability persist, the government's comprehensive approach aims to build a sustainable, efficient, and globally competitive power industry.