…Government-Owned Plants Operating at Just 20% Capacity
Nigeria’s power sector is grappling with systemic inefficiencies, and according to Bayo Adelabu, the Minister of Power, poor corporate governance practices are at the heart of these challenges, especially among government-owned assets.
Speaking in Abuja on Monday at the inaugural corporate governance forum convened by the Ministry of Finance Incorporated (MOFI), in collaboration with the World Bank, Adelabu stressed that weak governance structures are not only hindering value creation but also obstructing the country’s path toward energy security and economic development.
The two-day forum, held under the theme: “Ensuring Value Creation in State-Owned Enterprises Through Better Corporate Governance,” focused on the need to drive transparency, accountability, and efficiency in public enterprises.
The event also had MOFI launch a corporate governance scorecard for its over 50 portfolio companies to track performance.
Adelabu underscored that corporate governance is no longer a theoretical or optional element for Nigeria’s power sector — it is a matter of urgency.
“The evolving complexities of our economy, technological disruptions, and rising public expectations demand an overhaul of governance practices in state-owned enterprises. For the power sector, this transformation is necessary and already underway,” he stated.
One of the most significant structural reforms, according to the minister, is the recent unbundling of the Transmission Company of Nigeria (TCN) into two separate operational bodies: the Nigeria Independent System Operator (NISO) and the Transmission Service Provider (TSP), as part of the newly enacted Electricity Act of 2023.
The move, he said, is expected to foster operational transparency and improve governance practices, which he argued would, in turn, bolster investor confidence and improve the sector’s overall performance.
NISO will oversee the balance of electricity supply and demand in real-time, while TSP will manage and expand the transmission infrastructure.
However, the Minister cautioned that both entities must be governed with integrity, accountability, and independence to ensure they fulfill their mandates effectively.
Highlighting the importance of governance, Adelabu drew attention to the underperformance of government-owned generation plants.
Despite an installed capacity of 4,000 MW in plants operated by the Niger Delta Power Company (NDPC), these plants have only ever generated between 500 MW and 800 MW — a far cry from their potential.
“These plants, located in various regions such as Olorunsogo, Omoku, Sapele and Benin, have not generated beyond 20% of their capacity since inception,” he noted.
In contrast, private-sector-owned plants such as Azura, APE, and Transcorp have outperformed their state-owned counterparts, underscoring the critical link between governance and performance.
The Minister also called attention to the precarious state of the Transmission Company of Nigeria (TCN), the only government-owned entity in the transmission chain.
“Over the years, we have seen dilapidated infrastructure, poor maintenance, high transmission losses, and frequent grid collapses,” he lamented.
With more than several uncompleted power transmission projects, which have cost billions of naira without yielding significant progress, the minister described the situation as a direct result of poor governance and inadequate performance management practices.
Adelabu also highlighted poor performance and governance issues of distribution companies (DISCOs), where government holds a 40% stake, calling for a more active and accountable role from the government as a major shareholder.
“The private sector has exploited the indifference of the government, and this has resulted in poor service delivery. It is time to change this narrative,” Adelabu emphasised.
Addressing these challenges, Adelabu reaffirmed the administration’s commitment to tackling governance deficiencies across the power sector.
He pointed to the recent reforms as a sign of the government’s resolve to reverse the damaging trend of mismanagement and inefficiency.
“Good corporate governance is not a luxury; it is a necessity for financial sustainability, national effectiveness, and inclusiveness in service delivery,” he stressed.
Ndiame Diop, World Bank Country Director for Nigeria, who also spoke, called for urgent reforms in corporate governance to maximize the potential of Nigeria’s state-owned enterprises (SOEs) as drivers of economic growth and transformation.
Diop highlighted the critical role well-managed SOEs have played globally, citing examples from East Asia, including China and Malaysia, where they have catalyzed private investment and accelerated development.
Diop, who has just been elevated to the World Bank’s Vice President for Africa, emphasised Nigeria’s unique advantage of possessing a large portfolio of strategic assets across sectors such as power, agriculture, and financial services.
However, he acknowledged persistent challenges, including weak governance structures, incomplete financial audits, and transparency deficits.
“Less than 50% of MOFI’s corporate portfolio had published audited financial statements as of 2023,” he noted, underscoring the need for improvement.
Diop reaffirmed the World Bank’s commitment to supporting Nigeria’s efforts to enhance SOE governance through initiatives like the Fiscal Governance and Institutional Development Project.
Key achievements include the development of a national asset registry, MOFI portfolio management policies, and the launch of a corporate support card to monitor performance.
He stressed that transparency in financial reporting is essential not only for fairness but also for assessing fiscal risks posed by SOEs.
