Nigeria’s Power Sector: Opportunities and Challenges

Nigeria’s power sector has been a reflection of the economic growth strategy of the country. Power is a strategic infrastructure and represents the most important requirement for moving the economy forward. In post-independence Nigeria, the need for large scale investments in power infrastructure resulted in government dominance in the sector’s activities. The National Electric Power Authority (NEPA) was the government-owned utility company responsible for generation, transmission and distribution of electricity throughout Nigeria. It is estimated that about 40 per cent of Nigerians have access to electricity. Of the 6113 MW of installed generating capacity, only about 3300 MW is available, whereas demand is estimated to be in excess of 10,000 MW. The transmission and distribution infrastructures are in a dilapidated and deplorable state because of lack of maintenance and inadequate funding, making it difficult to evacuate power from generation sites to consumption points. Electricity tariffs are below the cost of service and there is poor revenue collection performance as about 30–40 per cent of power supplied is never billed. This has resulted in the dismal performance of the utility, financial losses and its consequent inability to invest for expansion and improvement.