By Taiwo Hassan Odugbemi/The Conversation
Nigeria’s electricity sector remains fragile. About 85 million Nigerians (43% of the population) lack access to grid electricity. This is one of the biggest energy access gaps in the world.
Generation capacity is roughly 12,000MW–13,500MW, but far less power is actually delivered. In 2023, Nigeria generated 4,500MW for a population of over 200 million. For comparison, Ethiopia, with a population of 132 million, recently added 6,000MW to its generation capacity. Prior to that, it generated 5,200MW.
Nigeria’s under-delivery is largely due to systemic challenges in the grid. These include technical inefficiencies, vandalism and ageing infrastructure.
A new Electricity Act was passed in 2023 to address these problems by providing a legal and institutional structure. It was also designed to steer Nigeria’s power sector towards greater efficiency, integrated planning and the inclusion of renewable sources of energy.
For the first time, the act empowered the 36 state governments to generate, transmit and distribute electricity within their territories.
By July 2025, 10 states had introduced their own electricity market laws. They had also begun to set up state-level regulators and frameworks to oversee electricity operations within their borders.
Frequent power outages affect Nigeria’s economy. It drives up the cost of doing business, stalling production and discouraging investment.
Distribution companies also face challenges. Only about half of the revenues owing to them end up in their coffers. This undermines financial sustainability.
Nigeria’s overall position of 15th in the Electricity Regulatory Index’s 2024 tables underscores a gap: strong governance and a solid regulatory toolbox, but weak consumer outcomes.
Despite reforms, weaknesses persist
Five issues explain why outcomes trail behind governance and substance:
- weak enforcement of rules, reducing investor and consumer confidence
- financial weakness: high losses and poor tariff collection undermine sector sustainability
- supply unreliability: outages are frequent and generation capacity is limited
- governance gaps: political interference constrains regulator independence
- limited consumer protection: complaints resolution and metering progress remain inadequate.
Moving forward
Nigeria’s electricity sector requires stronger, coordinated reforms to translate regulatory frameworks into reliable supply.
The federal government must make policies consistent and give the commission independence. Subsidies must be transparent and targeted.
The Nigerian Electricity Regulatory Commission must enforce tariffs, ensure there’s metering and protect consumers. It must also enhance market transparency. State governments, empowered under the 2023 Act, should establish credible regulatory agencies and align policies with national standards.
Distribution companies and generation companies must become more efficient and invest in infrastructure upgrades.
Finally, development partners and investors should provide technical and financial support tied to accountability.
Together, these actions can create a sustainable, consumer-focused electricity market.
*Odugbemi is a lecturer in Economics at the University of Abuja
