Nigeria to Sanction Underperforming Power Firms, Reward High Achievers Amidst N16.5 Trillion Self-Generation Spending

Nigeria's Federal Government is set to implement performance scorecards across the electricity value chain, signaling a new era of accountability for power sector operators. Distribution and generation companies (DisCos and GenCos) that fail to meet standards will face sanctions, while those demonstrating excellence will be recognized and rewarded. This initiative is part of a broader eight-point agenda by the Ministry of Power to stabilize the sector, restore market discipline, and strengthen governance.

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The power arithmetic does not add up.

The move comes as Nigerians continue to bear the immense economic burden of unreliable power supply. In 2023 alone, citizens spent an estimated N16.5 trillion on electricity generated independently, a stark contrast to the approximately N1 trillion generated by the national grid. This reliance on self-generation highlights the significant shortfall in the national power system. The Minister of Power, Joseph Olasunkanmi Tegbe, noted that Nigeria's installed grid capacity stands at 13,625 megawatts (MW), but only an average of 4,854MW is available daily. This leaves about 62% of installed capacity idle, despite a peak demand estimated at 20,000MW.

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Nigerians spent an estimated N16.5 trillion on self-generated electricity in 2023, compared with about N1 trillion in revenue generated by the national grid.

Minister Tegbe described the situation as a "power arithmetic that does not add up." He stated that the persistent gap between supply and demand costs the Nigerian economy approximately $25 billion annually, equivalent to 5-7% of its GDP. To address these challenges, the government plans tariff reforms to protect vulnerable consumers while ensuring supply obligations are met. Furthermore, efforts will focus on strengthening existing infrastructure and improving asset utilization, with specific plans to enhance key transmission corridors like Lagos, Enugu-Port Harcourt, and Abuja-Kaduna-Kano.

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Improving the performance of electricity operators and reforming tariffs were critical to creating a reliable power market capable of supporting industrialisation and boosting productivity.