Power Privatisation Scam and the N4trn GenCo Time Bomb
By Lawal Dahiru Mamman,
Nigeria’s struggle with electricity is not just about flickering bulbs or darkened homes. It is about the survival of industries, the health of small businesses, and the very foundation of national development.
Stable power supply is the bedrock of productivity—yet after more than a century of electricity generation, the sector still reflects more chaos than progress. The story began modestly in 1896, when Lagos hosted Nigeria’s first power plant with just 60 kilowatts of capacity.
Over the next few decades, plants sprouted in Port Harcourt, Kaduna, Enugu, Maiduguri, Yola, Zaria, Warri, and Calabar. But the system was fragmented—managed by native authorities and the Public Works Department—until 1950 when the Electricity Corporation of Nigeria (ECN) was created.
ECN soon became a national monopoly, consolidated further in 1972 when it merged with the Niger Dams Authority to form NEPA. For decades, “NEPA” became a household word, but mostly for the wrong reasons: inefficiency, chronic underinvestment, system losses, power theft, and blackouts that forced families and businesses to rely on expensive generators.
By 1999, fewer than 20 of Nigeria’s 79 power plants were functional. Barely 28% of installed capacity was delivered, leaving millions in perpetual darkness. These failures spurred reform efforts.
The National Electric Power Policy (2001) and the Electric Power Sector Reform Act (2005) opened the path to privatisation, creating 18 successor companies: 6 generation companies (GenCos), 11 distribution companies (DisCos), and 1 transmission company (TCN).
The promise was clear: privatise, attract investors, boost efficiency, and deliver reliable power. By November 2013, the federal government sold its stakes in the GenCos and DisCos, earning $2.5 billion in proceeds.
Companies like Transcorp Power, Geregu, Ughelli, Shiroro, Sapele, and Kainji took control of generation, while 11 DisCos took charge of retail distribution. But the dream quickly soured. A decade later, efficiency gains remain elusive.
Generation hovers below 5,000MW for a nation of over 200 million. Blackouts are frequent, tariffs are contested, infrastructure remains weak, and both GenCos and DisCos drown in debt.
The situation worsened in 2025 when GenCos raised alarm over a staggering N4 trillion owed to them by the federal government—N1.9 trillion in legacy debts and N2 trillion for power supplied in 2024 alone.
President Bola Tinubu admitted government liability, but insisted only verifiable claims would be honoured. By August, Finance Minister Wale Edun confirmed plans to clear the debts, signalling tacit acknowledgement.
This mountain of debt comes atop years of heavy subsidies and bailouts, with government interventions since 2023 alone estimated above N7 trillion. These include tariff adjustments through the Multi-Year Tariff Order (MYTO), direct subsidies, bailout funds, and payment guarantees.
Yet, paradoxically, Nigeria continues to subsidise a sector that was supposed to thrive under private ownership. The Electricity Act 2023 pushed for cost-reflective tariffs, expanded metering, and transmission upgrades.
But the larger question looms: has Nigeria’s privatisation model failed? Or has government’s constant interference—through subsidies and political tariff control—undermined the very logic of privatisation?
As the GenCos demand arrears, the DisCos complain of low remittances, and consumers groan under rising tariffs and unreliable supply, Nigeria must confront a hard truth: electricity is not just an economic issue but a governance test.
If the sector is to work, government must draw a clear line—provide enabling policy, enforce regulation, but step back from perpetual bailouts. The time has come to interrogate privatisation, recalibrate the framework, and design a power sector that delivers light, not debt.
For without power, the dream of industrial Nigeria remains trapped in darkness.
Lawal Dahiru Mamman writes from Abuja. He can be reached at: [email protected]