The Minister of Power, Mr Adebayo Adelabu, has announced that ongoing reforms in Nigeria’s electricity sector have attracted over $2 billion in fresh investments, signalling growing investor confidence in the industry’s transformation. Speaking at the commissioning of the new headquarters of the Nigeria Electricity Liability Management Company (NELMCO) in Abuja, Adelabu said the sector’s revenue grew by 70 per cent in 2024, while government liabilities were reduced by approximately N700 billion, reflecting improved efficiency and cost recovery mechanisms under the Renewed Hope Agenda of President Bola Tinubu. The reforms, which encompass policy overhaul, market liberalisation, and institutional strengthening, are repositioning the sector for sustainability, efficiency, and increased private sector participation.
The investment inflows represent a significant vote of confidence in the direction of power sector policy. For years, the industry struggled to attract private capital due to legacy liabilities, tariff shortfalls, regulatory uncertainty, and infrastructure deficits that constrained the ability of distribution companies to deliver reliable service. The reforms implemented under the Electricity Act 2023 have begun to address these structural barriers by enabling decentralisation and opening the door for subnational participation. Sixteen state electricity markets have been activated, stimulating competition and innovation within an industry that was historically centralised and monopolistic.
From a macroeconomic perspective, a functional power sector is foundational to economic growth. Manufacturing, services, and agriculture all depend on reliable electricity to operate efficiently, and the cost of self-generation through diesel and petrol has long been a drag on business competitiveness. The improvements in generation capacity—from 13 gigawatts to 14 gigawatts, with a peak generation record of 5,801.44 megawatts—represent tangible progress, though significant gaps remain between available capacity and demand. The synchronisation of Nigeria’s national grid with those of other ECOWAS countries following a four-hour uninterrupted test run signals growing stability and technical capacity, as well as readiness for expanded regional power exchange.
The metering gap has long been a flashpoint in the sector, with estimated billing practices creating friction between distribution companies and consumers. Adelabu noted that the Presidential Metering Initiative is backed by N700 billion mobilised through the Federal Account Allocation Committee, alongside an additional $500 million World Bank facility. Procurement processes are already underway to deliver millions of meters nationwide, a development that would improve revenue collection, reduce consumer complaints, and provide the data needed for network planning and load management. Accurate metering is also essential for attracting private investment, as it provides visibility into consumption patterns and cash flow.
NELMCO’s role in the reform process was highlighted during the commissioning, with Adelabu commending the agency for its contribution to stabilising the sector. The agency has reduced inherited liabilities from N2.303 trillion to N146.76 billion, delivered over N700 billion in savings to the federal government through rigorous verification and reconciliation processes, and achieved a 45 per cent reduction in post-privatisation liabilities owed by ministries, departments, and agencies to electricity distribution companies. These reductions in legacy liabilities clear a path for new investment by removing uncertainties that previously deterred capital.
The development of a National Integrated Electricity Policy, the first in over two decades, now provides a unified framework for implementing the Electricity Act while strengthening coordination between federal and state governments. This policy coherence is essential for attracting long-term investment, as infrastructure projects require predictable regulatory environments and alignment between different levels of government. The activation of state electricity markets also allows subnational governments to tailor approaches to local conditions, potentially accelerating access in areas where the national grid has historically underperformed.
