Thirteen years after privatisation: Nigeria is still paying for darkness, By Posi Olatubosun

Thirteen years ago, Nigeria sold its power sector to fix the lights. Who is still waiting for them to come on? On 1 November 2013, the Federal Government handed the generation and distribution companies to private owners amid promises of stable supply, private investment and an end to the generator economy. Thirteen years later, the verdict is plain: the reform has failed Nigerians. Installed capacity exceeds 13,000 megawatts, yet available generation still hovers between 4,000 and 5,000 megawatts, roughly where it stood before privatisation. The national grid collapsed twice in five days in January 2026 alone and suffered further disruptions in the months that followed. Homes and businesses still run on petrol and diesel. No serious economic recovery can be built on this foundation, and it is time to say so without euphemism.

The costs of unreliable electricity supply fall most heavily on producers and employers. The Manufacturers Association of Nigeria estimated that its members spent more than ₦1.5 trillion on alternative energy in 2025. BusinessDay reports that rising energy bills have imposed a fourfold cost shock on the country’s largest firms. Small businesses face even greater challenges, as they lack the bargaining power to negotiate bulk diesel supplies and the resources to install their own solar plants.

The Minister of Power has acknowledged that electricity generated using diesel costs approximately ₦950 per kilowatt-hour, while petrol-generated electricity costs approximately ₦750, compared with roughly ₦209 for Band A grid customers. When the grid fails, Nigerians pay three to four times more for energy, and these additional costs are reflected in the prices of bread, cement, and transport. Private-sector activity continues to expand; however, the October slowdown in the Stanbic IBTC PMI was attributed to rising fuel costs. Energy now represents a direct constraint on growth.

Privatisation, as a concept, did not fail; Nigeria’s implementation and oversight did. Four failures stand out, none of which can be attributed to a single administration. The first was the sale itself. Investors acquired assets that were, in many cases, undercapitalised and heavily leveraged, while having limited experience operating electricity utilities. Several distribution companies have since come under the control of AMCON or their lenders because of debt-related insolvency. Privatisation that leaves critical infrastructure in receivership does not transfer risk to private owners; it merely changes who bears the consequences of failure.

The second failure is a market where bills go unpaid. In January 2026, distribution companies received approximately ₦336 billion worth of electricity, billed customers ₦268 billion, and collected only ₦205 billion. The shortfall cascades upstream. Generation companies say they now receive well under half of the amounts they invoice and estimate that the debt owed to them had reached approximately ₦7.66 trillion by June 2026, warning that it could exceed ₦17 trillion by 2033. Of the ₦1.92 trillion owed to them for electricity supplied in 2025, the government paid approximately 3.7 per cent. A ₦501 billion bond issued under the presidential debt reduction programme covers only a small fraction of the legacy debt. Generators that are not paid cannot pay gas suppliers, while gas shortages—reported at approximately 937 million standard cubic feet per day earlier this year—keep power plants idle. The sector is trapped in a debt cycle that perpetuates inadequate electricity supply.

The third failure is pricing by politics rather than by principle. Tariffs below cost are a subsidy by another name, and an unfunded one. The government has, in effect, promised consumers cheap electricity and promised generators full payment, then failed to fund the difference. Election seasons make this worse, because no government wants to raise tariffs before voters go to the polls. The result is the worst of both worlds: Nigerians pay too little to finance a working system, and then pay far more for the diesel that replaces it.

The fourth failure is weak enforcement. Regulators were meant to review performance and act against operators that failed to invest, meter customers or reduce losses. Too often, enforcement has been deferred, negotiated or ignored. Millions of customers remain unmetered and are billed by estimate, which breeds distrust, encourages bypassing, and leads to non-payment. Band A customers, who pay premium tariffs for at least 20 hours of supply, have had to rely on regulatory orders for compensation when that supply failed to materialise. A regulator that cannot make its own rules stick invites the market to ignore them.

What must now be done? First, the government should conduct an honest, published audit of every distribution and generation company against its privatisation commitments. Operators that cannot recapitalise or deliver should be required to sell to investors who can. Thirteen years is long enough to assess this policy’s effectiveness. Second, the sector’s debt must be resolved through a credible, funded plan, not a series of announcements. If government wishes to keep tariffs below cost for vulnerable households, it must budget for the subsidy openly and pay it on time. An unfunded subsidy is not compassion; it is a promise that guarantees blackouts.

Third, metering must be completed. Every customer should be metered, and estimated billing should end. Accurate metering would raise collections, reduce disputes and strengthen the case for fair tariffs. Fourth, the opportunity created by the Electricity Act 2023 should be used decisively. States can now regulate their own electricity markets. Those that create credible frameworks for embedded generation, mini-grids and solar can attract investment far faster than the national grid can be repaired. The Vice President’s recent call for states to develop their electricity markets should be followed by concrete action.

Fifth, the transmission network needs sustained investment and independent management. Repeated grid collapses reflect a network that has not kept pace with demand. Without a stable grid, new generation capacity simply has nowhere to go.

Ultimately, from the perspective of a balanced scorecard (a performance measurement model), history will assess this reform by a single outcome: whether a generation of Nigerians grew up with reliable electricity. By that measure, thirteen years of privatisation have failed, and successive governments, regulators, and operators share responsibility. The scorecard is unforgiving across every dimension. Financially, debts owed to electricity generation companies (GENCOs) have reached approximately ₦7.66 trillion, while estimates of public funds spent on the sector since privatisation range from ₦7 trillion to ₦10 trillion.

From the customer perspective, manufacturers spent more than ₦1.5 trillion on alternative energy in 2025, and millions of households are still billed based on estimates rather than meter readings. In terms of internal processes, the national grid has collapsed more than 120 times in eleven years, and distribution companies collect only about three-fifths of the value of the electricity they receive. In terms of learning and growth, available generation remains between 4,000 and 5,000 megawatts, compared with more than 13,000 megawatts of installed capacity, while generation capacity has declined by approximately 15 per cent in five years. No reform agenda, growth target, or ambition to build a $1 trillion economy is credible while the country remains dependent on generators. Fixing the electricity sector is not just one priority among many; it is a precondition for all others, and leadership should treat it as such.

Posi Olatubosun is a UK-based academic faculty member in accounting and finance.