Thirteen Years After Privatization: Nigerians Still Face Power Cuts

Thirteen years ago, Nigeria sold its power sector to improve electricity supply. Who is still waiting for power? On 1 November 2013, the Federal Government handed control of generation and distribution companies to private owners. They promised better power supply, private investment, and an end to the generator reliance. Thirteen years later, the results are clear: the reform has failed Nigerians. Installed capacity is over 13,000 megawatts, but available generation is still between 4,000 and 5,000 megawatts, about the same as before privatization. The national grid collapsed twice in just five days in January 2026, and there were more disruptions after that. Homes and businesses still depend on petrol and diesel. No real economic recovery can happen on this shaky ground, and it is time to admit it openly.

The cost of unreliable electricity hits producers and employers the hardest. The Manufacturers Association of Nigeria estimated that its members spent over ₦1.5 trillion on alternative energy in 2025. BusinessDay reports that rising energy bills have caused a fourfold cost shock for the country’s biggest firms. Small businesses struggle even more because they cannot negotiate bulk diesel prices or afford to set up their own solar systems.

The Minister of Power has said that electricity from diesel costs about ₦950 per kilowatt-hour, and petrol-generated electricity costs around ₦750. In comparison, grid customers in Band A pay about ₦209. When the grid fails, Nigerians pay three to four times more for energy, and these extra costs show up in the prices of bread, cement, and transport. Private-sector activity is still growing; however, the October slowdown in the Stanbic IBTC PMI was linked to rising fuel costs. Energy now directly limits growth.

Privatization itself did not fail; Nigeria’s way of doing it and the oversight were the real problems. Four major failures stand out, and none are due to just one government. The first failure was the sale itself. Investors bought assets that were often underfunded and over-leveraged, with little experience running electricity utilities. Some distribution companies are now controlled by AMCON or their lenders due to debts. Privatization that leaves key infrastructure in receivership does not shift risk to private owners; it only changes who faces the fallout from failure.

The second failure is a market where bills remain unpaid. In January 2026, distribution companies received about ₦336 billion worth of electricity but billed customers ₦268 billion and collected only ₦205 billion. This shortfall affects everything upstream. Generation companies say they now receive less than half of what they bill. They estimate that debts owed to them reached around ₦7.66 trillion by June 2026 and could hit ₦17 trillion by 2033. Of the ₦1.92 trillion owed to them for electricity in 2025, the government paid only about 3.7 percent. A ₦501 billion bond from the presidential debt reduction programme covers just a small part of the old debt. Generators that don’t get paid cannot pay for gas, while gas shortages, around 937 million standard cubic feet per day earlier this year, keep power plants from working. The sector is stuck in a debt cycle that leads to poor electricity supply.

The third failure is pricing driven by politics instead of principles. Tariffs below costs act like a subsidy, but it is not a funded one. The government has promised cheap electricity to consumers and full payment to generators but has not funded the gap. Election seasons make it worse because no government wants to raise tariffs before elections. This creates a tough situation: Nigerians pay too little to support a working system, then pay much more for diesel when the system fails.

The fourth failure is weak enforcement. Regulators should review performance and act against operators who fail to invest, meter customers, or reduce losses. Enforcement is often delayed, negotiated, or ignored. Millions of customers are still unmetered and receive estimated bills, which causes distrust and encourages bypassing, leading to non-payment. Band A customers, who pay premium rates for at least 20 hours of supply, have had to rely on regulatory orders for compensation when they do not get the supply promised. A regulator that cannot enforce its own rules invites the market to ignore them.

What needs to happen now? First, the government should carry out a truthful, published audit of every distribution and generation company to see if they meet their privatization promises. Companies that cannot recapitalize or deliver should sell to capable investors. Thirteen years is long enough to judge if this policy works. Second, the sector’s debt must be settled with a solid, funded plan, not just announcements. If the government wants to keep tariffs low for vulnerable households, it must budget for the subsidy and pay it on time. An unfunded subsidy is not kindness; it is a promise that leads to blackouts.

Third, metering should be finished. Every customer must be metered, and estimated billing must stop. Accurate metering would boost collections, reduce disputes, and support fair tariffs. Fourth, the chance from the Electricity Act 2023 should be used effectively. States can now manage their own electricity markets. States that set up strong frameworks for embedded generation, mini-grids, and solar can attract investment faster than fixing the national grid. The Vice President’s recent call for states to develop their electricity markets should lead to real action.

Fifth, the transmission network needs ongoing investment and independent management. The repeated grid collapses show that the network has not kept up with demand. Without a stable grid, new generation capacity cannot be used.

In the end, looking at a balanced scorecard, history will judge this reform by one main outcome: did a generation of Nigerians grow up with reliable electricity? By that measure, thirteen years of privatization have failed, and all governments, regulators, and operators share the blame. The scorecard is harsh on every front. Financially, debts to electricity generation companies (GENCOs) have hit about ₦7.66 trillion, while estimates of public funds spent on the sector since privatization range from ₦7 trillion to ₦10 trillion.

From the customer point of view, manufacturers spent over ₦1.5 trillion on alternative energy in 2025, and millions of households still get estimated bills instead of meter readings. In terms of internal processes, the national grid has collapsed more than 120 times in eleven years, and distribution companies only collect about three-fifths of the value of the electricity they receive. In terms of learning and growth, available generation stays between 4,000 and 5,000 megawatts, compared to over 13,000 megawatts of installed capacity, while generation capacity has dropped by about 15 percent in five years. No reform plan, growth target, or ambition to build a $1 trillion economy is believable while the country relies on generators. Fixing the electricity sector is not just one task among many; it is the foundation for all others, and leaders must treat it as such.