This article canvasses the point of view that it is time for the Federal Government of Nigeria (FGN) under the leadership of President Bola Ahmed Tinubu to undertake a critical strategic review of the investment climate in the Nigerian power sector, coming after the approval of the Nigeria Integrated Electricity Policy (NIEP 2025) by the Federal Executive Council on May 5, 2025. That was a landmark achievement for which the Minister of Power and his team should be commended, but we must keep pushing boundaries because time is not on our side. I have written fifteen articles on the power sector since January 27, 2025 in this column focusing on privatisation, the Mission 300 Energy Africa Summit in January 2025;three articles on the Nigeria Energy Compact; an article on looking beyond Mission 300; two articles on a review of the Nigeria Integrated Electricity Policy (NIEP 2025); one on the NIEP and our transmission infrastructure; one on transforming the Rural Electrification Agency into the Renewable Energy Agency, which is a more appropriate name reflective of its current range of programmes and activities; an article on the global surge in renewable energy ; and lastly two articles that reviewed the Nigeria Integrated Resource Plan (NIRP 2024). The article written by Mr. Eno Ekpo, Team Leader, Power, United Kingdom Nigeria Infrastructure Advisory Facility (UKNIAF), titled, “National Integrated Electricity Policy 2024 and the road to attaining energy security in Nigeria,” published by BusinessDay on May 12, 2025, complements, I belief, my effort above.
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While it is necessary to commend the current administration for its policy activism in the power sector, especially with respect to NIEP 2025 and NIRP 2024, and the leadership visibility of the Minister of Power, Chief Adebayo Adelabu, it must, however, be pointed out that Nigeria must seize the moment for bolder reforms in the power sector in the form of an unequivocal privatisation policy that will drive more vigorously and with certainty the realisation of the Federal Government of Nigeria’s aspirations for the power sector as embedded in NIEP 2025. The government’s desire to attract the required quantum of private investment to the power sector is going to be impracticable without an unequivocal and reassuring policy stance on privatisation.
“The government’s desire to attract the required quantum of private investment to the power sector is going to be impracticable without an unequivocal and reassuring policy stance on privatisation.”
My article titled, “The Nigerian power sector: Time to act is now,” published on January 27, 2025 urged the President to act swiftly to privatise the power sector as the lasting solution to over four decades of power crises in Nigeria. The subsequent article on February 3, 2025 titled, “Privatising the Nigerian power sector: Reasons President Tinubu should act now,” adduced five reasons: 1) The power sector is critical to Nigeria’s economic recovery and competitiveness; 2) poor power supply has crippled production, increased costs of production, and is the major cause of de-industrialisation, including the exodus of major manufacturing multinationals; 3) the government has neither the financial muscle nor the technical know-how to manage the power sector; 4) Nigeria lags behind our key African peers of Egypt and South Africa, producing roughly about ten percent of their annual power generation; 5) and lastly, Nigeria needs to dramatically expand power production to galvanise industrialisation and prevent further exodus of manufacturing multinationals and other firms.
And there are additional reasons, especially pursuant to meeting our power sector investment aspirations. FGN recently announced an investment plan for the power sector of $122.2 billion in the next two decades – between 2025 and 2045. The Honourable Minister of Power, in an interview last week, said Nigeria needs an annual investment of $10 billion in the power sector in the next ten to twenty years, which is nearly double the earlier $122 billion projection in twenty years. In the last ten years, Nigeria has not recorded up to $2 billion in annual investment on average in the power sector, largely due to a hostile business environment. So, what has really changed, apart from aspirational statements, and how do we intend to engineer a quantum leap in power sector investment inflows to about $10 billion annually? Thus, the first additional reason why the full privatisation of the power sector is necessary and urgent is to achieve the government’s investment targets and aspirations. NIEP 2025 by itself cannot bring in the required investments from the private sector.
Secondly, the Nigerian power sector is privately owned only to the tune of about 30 percent or so: the 11 power distribution companies are still 40 percent owned by the federal and state governments, the transmission subsector is fully owned by the government, the ten Niger Delta Independent Power Plants are fully owned by the federal and state governments, and all the hydropower dams are fully owned by the government. This is evidence that the Nigerian power sector is overwhelmingly public sector owned and managed, which is a great disincentive to private investment. Third is the need for Nigeria to urgently leverage investment in its abundant fossil fuel (natural gas) deposits before the global decarbonisation drive dries up funds for fossil fuel investments in power generation. Fourthly, as my article of April 21, 2025, on the global surge in renewable energy correctly pointed out, 2024 recorded over a 29 percent growth rate in solar energy generation, enabling the world to surpass 40 percent clean energy in the global energy mix. Egypt’s renewable energy penetration target in its electricity grid is 42 percent by 2030. South Africa’s target is 33 percent renewable energy power generation by 2030. China and India are decoupling their energy demand growth from fossil fuel, which is expected to tip global demand for energy toward renewable energy.
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The implication of the above scenario is that if we do not privatise the power sector now, the mistake we made with the privatisation of Nigerian Telecommunications Ltd (NITE) will be repeated: the ten Niger Delta Power gas-fired plants and other government-owned power assets will be sold at a heavy discount in an era of renewable energy predominance and scarcity of funds for investment in fossil fuel power plants. Privatisation of the power sector in Nigeria is inevitable, and the best time to do it and encourage an inflow of billions of dollars of private investment into the power sector is now.
Mr Igbinoba is Team Lead/CEO at ProServe Options Consulting, Lagos.
