A Review of the Nigerian Energy Industry

Power sector stunted by sundry problems

13 October 2015, Abuja – From the records, Nigeria’s first public electricity utility company, the Nigerian Electricity Supply Company (NESCO), was established in 1929, some 30 years after electricity generation had started in the country in 1896.

Power transmission station
Power transmission station

After years of operation, NESCO reportedly handed over the management of the country’s public electricity utility to the Electric Corporation of Nigeria (ECN), established in 1951 to take over the assets and operations of NESCO.

However, 11 years after, a new partner for the ECN, the Nigeria Dams Authority (NDA) was established in 1962 to help the country develop and deploy her hydropower potentials.

Both ECN and NDA subsequently merged in 1972 to form the National Electric Power Authority (NEPA), which for long had a monopolistic influence over public power supply in the country.

NEPA later transmuted into the Power Holding Company of Nigeria (PHCN) following the enactment of the Electric Power Sector Reform Act of 2005 that unbundled PHCN for subsequent privatisation of the power sector.

Prior to the enactment of the Electric Power Sector Reform Act of 2005, the sector was governed by a number of legislations which included the Constitution of the Federal Republic of Nigeria; the Electricity Act, Cap 106, Laws of the Federation of Nigeria (LFN) 1990 (as amended) as well as other auxiliary legislations like the National Electric Power Authority Act, Cap 256, LFN 1990 (as amended).

With these pieces of legislation, the federal ministry of power for years ran the power sector in Nigeria, serving as both the policymaker and regulator.

The power ministry had regulated the sector mostly through one of its departments, the Electrical Inspectorate Services (EIS).

The ministry’s years of management of the sector yielded very little in terms of growth in capacity.

Due to inefficient management style, NEPA could not provide quality electricity to the country.

By the late 1990s, it became convincingly clear that Nigeria’s electricity system had failed to meet her power needs.

Lack of infrastructure and capacity growth
The Bureau of Public Enterprises (BPE) had noted that before the National Electric Power Policy of 2001 kicked off the power sector reform in Nigeria, the power sector had reached the lowest point in its 100 years of history.

According to BPE, out of the 79 generation units that the country had, only 19 units were operational with average daily generation at about 1,750 megawatts (MW).

The government, which ran the sector, had built no new electric power infrastructure between 1989 and 1999 as the youngest generation plant in the country was completed in 1990 and the last transmission line built in 1987.
The country for years failed to upgrade the capacity of the electricity infrastructure to keep pace with population expansion and perhaps economic targets.

The result as explained by a one-time Director General of BPE, Bolanle Onagoruwa, was a docile public power system.

Additionally, an estimated 90 million people were without access to on-grid public electricity while accurate and reliable estimates of the industry’s technical and commercial losses were unavailable, though most of the industry operators had believed that it was in excess of 50 per cent.

  • This Day
In this article

Join the Conversation