Posted Wed, Jul 1, 2020 11:06 AM

Nigerian Electricity Supply Industry: Power for Economic Growth

As the new electricity tariff sets in and the looming global recession, it is evident that not much has changed in Nigeria’s electricity industry. It has become pertinent that Nigeria needs an improved electricity industry and constant power supply for the country to move forward. Over the years, the Nigerian Electricity Supply Industry (NESI) has undergone fundamental changes over the past few years with the implementation of the government’s reform programme reputed to be one of the most ambitious privatisation exercises in the global power industry with a transaction cost of over three billion dollars ($3.0 billion).

Some fundamental changes that has occurred in NESI over the years include the formation of the Power Holding company of Nigeria (PHCN) in 2005, unbundling of PHCN into 18 independent companies and commencement of 10 generating plants in 2016 to introduction of multi-year tariff order committee in 2008. Others include the shortlisting of firms for the acquisition of PHCN power assets in 2010 and privatisation of 11 distribution companies and 5 generation companies in 2013.

NESI has been in a vicious cycle and this has not allowed the industry to improve its performance, with the increasing liquidity crisis becoming a serious risk for the Nigerian banking sector. According to the African Development Bank, Nigeria spends N5.075 trillion annually to power generators. The solution to the problems in Nigeria’s electricity sector is to create and operate a successful electricity market.

However, several issues are currently arising from the current Nigerian Electricity Supply Industry that have had a major effect on performance improvement. As a result of this, the Nigerian Economic Summit Group (NESG) and several stakeholders have identified 7 pillars for creating a successful electricity market. These pillars include Independent urban enumeration and revenue tracking, tariff structure overhaul, effective regulation and governance, contract and performance alignment, open metering space, sustained infrastructure growth and standardized industry data.