Power sector crisis: Between diagnosis and delivery - Punch Newspapers

NIGERIA’S power crisis has defied privatisation, tariff reforms, market restructuring, presidential committees, recovery programmes and countless promises. What it has not confronted yet is sustained political will to make the entire electricity value chain work as one commercial and technical system. That is why the diagnosis offered by the Minister of Power, Joseph Tegbe, deserves attention, and why the Federal Government must resist the temptation to treat a further set of policy announcements as reform itself. Presenting his first 100-day scorecard, Tegbe ruled out another electricity tariff increase and acknowledged that the problem extends from gas supply through generation, transmission and distribution. He said only 27 per cent of GenCos’ bills were being paid, while DisCos suffer aggregate technical, commercial and collection losses of 30 to 40 per cent. He also identified ageing generation equipment, deferred maintenance, vandalised transmission infrastructure, inadequate metering, estimated billing, weak payment discipline, accumulated debts and regulatory uncertainty. This is an unusually candid diagnosis. More importantly, it is substantially correct. The power sector has been diagnosed endlessly. What has been missing is the determined, hands-on execution required to transform the diagnosis into a cure. Tegbe is right that another tariff hike, by itself, cannot cure the electricity sector. Nigerians have already endured substantial increases while millions still pay for electricity they do not reliably receive, while businesses spend $14 billion yearly running generators to bridge the gap. The World Bank estimated Nigeria’s annual economic losses from unreliable power at about N7 trillion to N10 trillion, equivalent to roughly 5.0 to 8.0 per cent of GDP. Nigeria is paying a real and expensive tariff in lost production, abandoned investments, reduced working hours, damaged appliances, higher business costs, unemployment and diminished household welfare. The tragedy is that the country has repeatedly attacked symptoms while allowing the disease to fester. The 2013 privatisation was supposed to unleash private capital and commercial discipline. It did not produce the promised transformation. Earlier reforms included the 2005 unbundling, multi-year tariff orders, the Power Sector Recovery Programme and, more recently, the Electricity Act 2023. Executive Director and Convener of PowerUp Nigeria, Adetayo Adegbemile, recently assessed that after two decades of reforms under different policy regimes, the crisis persists because of institutional and incentive failures. This should make the government wary of announcing another grand reform without an equally serious implementation machine.See more Punch stories on Google.Add Punch on Google NERC’s April 2026 operational factsheet showed 13,625MW of installed grid-connected capacity but only 4,286MW available for dispatch, or a plant availability factor of just 31 per cent. In the second quarter of 2025, aggregate distribution losses stood at 37.92 per cent, 17.38 percentage points above the allowed efficient-loss target, producing an estimated N158.05 billion revenue loss during the quarter. This explains why electricity disappears between the power station and the consumer. Tegbe’s own figures show that some immediate interventions can make a difference. The 375MW Alaoji plant was returned to service after three years offline; transformers at Apapa, Ijora, Alausa and Lekki reportedly unlocked 672MW of transmission capacity, while a new 300MVA transformer at Katampe unlocked another 240MW. Generation subsequently peaked at 5,330MW in August and September. Those interventions demonstrate that recovering existing capacity can sometimes be faster and cheaper than endlessly announcing new power plants. But 5,330MW is nothing to celebrate in a country of over 230 million people. Tegbe himself acknowledged that national generation figures can coexist with unreliable feeders in individual communities. The ultimate measure of reform is not what the control room records; it is whether homes, factories, hospitals, schools and businesses receive predictable electricity. The minister’s proposed concentration on the Lagos, Enugu-Port Harcourt and Abuja-Kaduna-Kano transmission corridors, technical audits, a Transmission Super Grid, better utilisation of existing generation, bilateral contracting and improved reporting is therefore directionally sensible. The power sector needs a government-led rescue of the system before another round of private-sector expectations. This does not mean returning electricity generation and distribution permanently to government ownership. Rather, the government must restore the physical and commercial foundations upon which private investment can operate. And the priority must be the grid. DisCos collect ₦205bn revenue as billing gap hits ₦83bn FG unveils 581kWp solar mini-grid in Kwara DisCos collected N205bn revenue in July – NERC Nigeria cannot have a credible electricity market while transmission remains a bottleneck vulnerable to equipment failure, vandalism and system instability. The government must therefore establish a transparent, funded programme to restore grid capacity, replace obsolete equipment, reinforce critical substations and lines, modernise system operations and enforce security around strategic infrastructure. Sector financing must be addressed. Tegbe’s disclosure that GenCos receive only 27 per cent of their bills exposes the absurd situation of the market. A generator that is not paid cannot reliably maintain its plant. A gas supplier that is not paid cannot reliably supply gas. A DisCo that cannot collect revenue cannot pay the generator. The consumer then suffers the consequences of such dysfunction. NERC reported that government electricity subsidy obligations reached N1.93 trillion in 2025, demonstrating the enormous fiscal cost of keeping tariffs below cost-reflective levels. Yet, tariff increases are politically toxic if customers are not metered. Therefore, perpetual subsidy or perpetual tariff increases are not the solution. The government must establish a transparent transition mechanism for legacy debts and subsidy obligations, enforce payment contracts and ring-fence funds so that money moves predictably through the value chain. Sector rules must be enforced. In August 2026, NERC dissolved the board of Kaduna Electricity Distribution Company after the utility accumulated approximately N456.5 billion in market obligations, recorded 71.88 per cent ATC&C losses and invested only N2.48 billion against a capital requirement of N24.51 billion. That should not be a one-off intervention. A properly functioning electricity market must reward efficiency and punish failure, regardless of whether the offender is a government agency, DisCo, GenCo, gas supplier or large electricity consumer. The same principle must apply to metering, electricity theft, estimated billing and payment discipline. Tegbe says 350,000 meters were installed during his first 100 days, bringing cumulative installations to more than one million. The government has also unlocked procurement of about 1.4 million smart meters. These are useful steps, because metering must be seen as the foundation of a trustworthy electricity market. There is also a strong case for making the private sector a beneficiary of reform rather than its substitute. The Electricity Act 2023 permits states to establish their own electricity markets, while NERC retains responsibility for national-grid and inter-state electricity activities. By May 2026, 15 states had transferred intrastate regulatory oversight to state regulators. This decentralisation can create opportunities for embedded generation, mini-grids and state-level electricity businesses. But it also makes harmonised rules, technical standards, wheeling arrangements and dispute resolution indispensable. Fragmentation without coordination could simply create another layer of regulatory uncertainty. When Egypt experienced severe electricity shortages between 2012 and 2014, the government pursued a comprehensive programme involving institutional reform, tariff and subsidy reform, regulation and large-scale investment. The reforms helped mobilise more than $2 billion in private renewable-energy investment and supported the addition of 1,500MW of solar capacity between 2014 and 2018. Today, Egypt generates 55,000 MW. Nigeria can learn by creating the conditions under which private capital can function with credible rules, institutional reform, financing support and a clear energy strategy. The government must restore the grid, clean up legacy debts, enforce market rules, make payment mechanisms credible, protect infrastructure, improve metering, strengthen regulation and provide legal certainty. Then private capital can come in behind those guarantees, attracted by predictable returns, a clearly defined market, enforceable contracts, security and the confidence that it can actually deliver the service customers are paying for. Tegbe appears to understand this. His diagnosis that the problems reinforce one another is perhaps the most important point in his presentation. That unpaid bills weaken gas supply and maintenance; unreliable electricity depresses collections; poor collections deepen debt. The harder part is relentless execution of needed reforms. The Bola Tinubu administration has promised a more prosperous Nigeria, but that promise cannot be fulfilled on generators and household inverters. Power is the platform upon which virtually every other promise depends. Tegbe’s first 100 days may have produced a credible diagnosis and some encouraging repairs. The next phase must demonstrate that government finally has the political will, money, discipline and staying power to make Nigeria’s electricity market work. Quote: Punch Editorial Board

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