Transforming Nigeria’s Power Sector: Major Milestones and Challenges in 2024

Amidst numerous challenges, the sector recorded notable activities and developments this year, from policy reforms and infrastructure upgrades to increased private sector participation and investments in renewable energy.

It also recorded the highest number of grid collapses in a single year.

As the country strives to bridge its energy gap and power its growing economy, the notable events and developments in the power and utility sector will shape the country’s future as we draw the curtains on 2024 and knock on the new year.

The Ministry of Finance Incorporated (MOFI) officially assumed ownership and management of the Federal Government’s 40% equity in the Electricity Distribution Companies (DisCos). This transition aligns with MOFI’s mandate to ensure efficiency in managing these companies and boost government revenue.  

During the 2013 privatization of the 11 DisCos, MOFI granted a Power of Attorney (PoA) to the Bureau of Public Enterprises (BPE) to manage the government’s retained 40% shares. However, this arrangement was recently revised. In two separate letters signed by the Minister of Finance and Coordinating Minister for the Economy, as well as MOFI’s CEO, the PoA was terminated. 

This decision underscores the government’s intent to centralize ownership, management, and control of its equity holdings under MOFI, as stipulated in the agency’s founding legislation. 

This shift marks a significant step toward professionalizing and centralizing the management of government-owned assets in the power sector, a sector long hampered by inefficiency and financial mismanagement. 

By consolidating control under MOFI, the government aims to enhance governance, accountability, and operational efficiency. This restructuring could also attract private sector investment, stabilize the power supply, and expand electricity infrastructure. 

For Nigerians, this move holds the potential for improved electricity services and a more sustainable energy sector, addressing one of the country’s critical development challenges. 

President Bola Ahmed Tinubu signed the Electricity Act (Amendment) Bill 2024 into law on February 9, marking a significant development in Nigeria’s efforts to reform its power sector. 

The Electricity Act (Amendment) Bill, 2024, seeks to “address the development and environmental concerns of host communities, and sets aside five percent of the actual annual operating expenditures of power generating companies from the preceding year for the development of their respective host communities.” 

This development follows the recognition of the urgent need to reform Nigeria’s electricity infrastructure, which has faced issues of instability, insufficient investment, and inadequate access, especially in rural areas. 

Also, the Bill has measures to empower the Nigerian Electricity Regulatory Commission (NERC) to enforce stricter compliance with industry standards and encourage the transition towards cleaner energy alternatives became more imperative 

This move is seen as a crucial step toward addressing Nigeria’s electricity crisis, which has hindered economic growth and development for decades. By fostering a more transparent and sustainable energy framework, the amendment is expected to pave the way for increased foreign investments, more reliable power supply, and the creation of jobs in the renewable energy sector. 

In March 2024, the Federal Government announced the removal of subsidies on electricity mostly for customers on Band A feeders, promising them improved supply.

In March 2024, the Federal Government announced the removal of subsidies on electricity mostly for customers on Band A feeders, promising them improved supply.

The government argued that the removal of the electricity subsidy was to improve supply and allow it to pay off its mounting debt in the utility sector.

At the time, the federal government owed electricity-generating companies over a trillion naira while the generating subsector grappled with poor gas supply in power plants.

Various stakeholders in the Power sector had urged the federal government to pay the debts it owed GenCos. In the same vein, the President had promised to address the energy poverty faced by the majority of Nigerians.

In February 2024, Nigeria’s Minister of Power, Adebayo Adelabu, pledged to ensure all households and businesses are properly metered.

Adelabu stated this in Okene, Central senatorial district of Kogi State when he commissioned a 60MVA, 132/33kV power transformer within the Okene Transmission Substation.

The project which was awarded on the 6th of March 2023 under the Presidential Power Initiative was aimed at improving power supply to parts of Kogi, Edo, and Ondo states.

Providing metres to Nigerians helps ensure accountability in electricity billing by distribution companies. With accountable billing comes fairness and efficiency in fee collection.

In May 2024, the Federal Government said it would patronise local manufacturers for electricity equipment.

The Minister of Power, Bayo Adelabu promised that agencies under the Ministry of Power would be encouraged to patronise local manufacturers.

This patronage will boost sales for local manufacturers in the electronics market, and consequently impact the country’s economy positively. This is coming at a time when manufacturers lament about high production cost and poor sales as a result of inflation.

The Board of Directors of the African Development Bank Group approved a loan of $500 million to Nigeria, to finance the first phase of the Economic Governance and Energy Transition Support Program (EGET-SP), a new program aimed at accelerating transformation of the country’s electricity infrastructure and improving access to cleaner sources of energy. 

The Nigerian government launched the energy transition plan in August 2022, and in June 2023, passed a new Electricity Act decentralizing the electricity supply industry and setting the stage for increased investments by subnational governments and the private sector. 

The energy transition plan envisions the development, by 2050, of 250 GW of installed electricity capacity, 90% of which will be renewable. It will provide clean cooking access to the bulk of the population by 2030, using liquefied petroleum gas (LPG), biogas, biofuels like ethanol, and electric cookstoves. 

This initiative helps deliver much-needed upgrades of Nigeria’s electricity infrastructure, and fast-tracking the country’s efforts to transition millions of households and businesses to cleaner and renewable sources of energy. 

The United States Agency for International Development and the Federal Ministry of Power signed a memorandum of understanding to secure Nigeria’s commitment to electricity sector reforms, market transparency, liquidity, and expanding access to affordable power. 

More than 85 million Nigerians have no access to grid power, and many have suffered from unreliable power supply. Given these challenges, many Nigerian families and businesses depend on expensive, emission-intensive petrol and diesel backup generators. 

The USAID-Nigeria deal helps millions of Nigerians to access affordable electricity especially in the rural areas. 

Nigerian Electricity Distribution Companies (DisCos) recorded the sum of  N431.16 billion as revenues from customers in Q2 2024, reflecting a collection efficiency of 79.31%.

Context: According to the quarterly report of the Nigerian Electricity Regulatory Commission (NERC) for the second quarter of 2024, DisCos had a total billing of N543.64 billion.

The 79.31% collection efficiency represents a modest increase of 0.20 percentage points when compared to the previous quarter’s 79.11% efficiency.

The Nigerian government has consistently argued that Nigerians were not willing to bear the cost of constant electricity supply.

An increase in payment collection by DisCos shows that this narrative is changing. It can be said that the current administration’s decision to remove the electricity subsidy and the hike in tariff for customers on Band A feeders contributed to this development.

In August 2024, the Federal Government approved a 50 per cent subsidy for the electricity consumed in hospitals across the country.

This was announced by the Minister of State for Health and Social Welfare, Dr. Tunji Alausa, who noted that the aim was to reduce the running costs for public hospitals and alleviate the impact on patients