Nigeria’s power sector operates through a complex network of key players responsible for electricity generation, transmission, and distribution.
The sector underwent a significant transformation in 2013 when the government privatized power generation and distribution companies while retaining control of transmission.
Understanding the major stakeholders in the industry, from power-generating companies (GenCos) to transmission and distribution companies (DisCos), alongside regulatory bodies provides insight into the sector’s structure and the factors shaping electricity supply in Nigeria.
At the heart of power generation are the GenCos, which include private companies that operate thermal and hydroelectric power plants.
These companies generate electricity and supply it to the Transmission Company of Nigeria (TCN), the sole government-owned entity responsible for transmitting power across the country.
The Distribution Companies (DisCos) then receive electricity from the transmission grid and deliver it to homes, businesses, and industries.
Overseeing the sector is the Nigerian Electricity Regulatory Commission (NERC), which enforces policies, tariffs, and service regulations.
Power Generation in Nigeria
Nigeria’s electricity generation relies primarily on gas-fired and hydroelectric power plants.
As of 2023, the country had 29 grid-connected generation companies (GenCos), with 25 relying on gas and only four utilizing hydropower.
These GenCos supply electricity to the national grid, playing a crucial role in the country’s energy landscape.
- Beyond the grid, the Nigerian Electricity Regulatory Commission (NERC) has licensed 74 off-grid generation companies to provide alternative energy solutions, particularly in underserved and remote areas.
- The System Operator (SO) is responsible for managing power generation from these plants to ensure a stable and efficient supply.
- Nigeria’s power generation sector comprises both Independent Power Producers (IPPs) and government-backed initiatives. Key IPPs include Shell, AGIP, Azura, and Ibom Power, which contribute significantly to electricity production.
- Additionally, the National Integrated Power Projects (NIPPs) —such as Geregu, Olorunsogo, and Omotosho, among ten NIPPs across the country were established by the government to boost power supply and address generation shortfalls.
They were originally owned by the three tiers of government and managed by the Niger Delta Power Holding.
However, some of them have since been sold to private companies, some under concessionaires, while others remain under the control of the government through NDPHC.
Below is the full list of Nigeria’s power plants and their ownership status:
Power Transmission in Nigeria
- The Transmission Company of Nigeria (TCN) is responsible for the bulk transfer of electricity from Generation Companies (GenCos) to Distribution Companies (DisCos) and eligible customers.
- This process is carried out through high-voltage transmission lines and substations, which form the national grid. Unlike power generation and distribution, which were privatized, the transmission network remains wholly owned and operated by the Federal Government through TCN.
- The company also holds an Independent System Operator (ISO) license, which allows it to oversee grid stability and coordinate power flow across the country.
Power Distribution
Electricity distribution in Nigeria is handled by Distribution Companies (DisCos), which are responsible for delivering power to homes, businesses, and industries.
During the 2013 power sector reform, eleven successor DisCos were privatized, with 60% of their equity sold to private investors, while the government retained a minority stake.
These DisCos are all connected to the national transmission network, receiving electricity from the Transmission Company of Nigeria (TCN) and distributing it across their respective coverage areas.
In addition to the eleven privatized DisCos, Aba Power Limited Electric (APLE) operates as an independent distribution company.
It was carved out of the Enugu Electricity Distribution Company (EEDC) and licensed by the Nigerian Electricity Regulatory Commission (NERC) to distribute electricity within a ring-fenced network in Abia State.
This means APLE serves a specific area with a dedicated power supply, ensuring improved service delivery to commercial and residential consumers in the region.
Electricity Distribution Companies and their ownership statuses by the end of 2023 (some of them may have changed ownership).
Regulatory Bodies
- The electricity market is regulated by the Nigerian Electricity Regulatory Commission (NERC), which is empowered by law to monitor the operation and development of the market, promote transparency, and ensure fair and balanced regulations for market participants and consumers.
- The Electricity Act 2023 mandates the Commission to “promote competition and private sector participation in the post-privatized power sector, when and where feasible.”
- Meanwhile, following the amendment of EA 2023 in 2024. NERC has transferred regulatory oversight of electricity to states that have set up electricity regulatory agencies. The commission retains its regulatory functions at the federal level and in states without regulatory bodies.
Renewable Energy for underserved communities
Despite the progressive transformation of the power sector, the national grid does not receive enough power from generation plants and, therefore, underserves the Nigerian populace.
The NERC acknowledges that there is a huge disparity in electrification between urban and rural areas, with the latter having only 40% electrification as of the end of 2023.
However, renewable energy, particularly solar, is playing a significant role in bridging the gap.
The Nigeria Electrification Programme (NEP) of the Rural Electrification Agency is providing energy access to rural households, small businesses, educational institutions, and health facilities through solar-powered mini-grids, Standalone Solar Home Systems (SHS), rooftop solar, and captive power plants.
- According to the REA, 176 solar hybrid mini-grids have been deployed across Nigeria, providing electricity to over 20 million Nigerians, including MSMEs, public health and educational facilities, and agribusinesses.
- REA says 237,000 MSMEs and agribusinesses have been provided with reliable electricity through the NEP, which is private-sector driven.
- While Nigeria has come a long way in advancing energy access through its diverse energy mix, millions of Nigerians still wallow in energy poverty as a result of a lack or shortage of electricity.
Last year, the Minister of Power, Bayo Adelabu, said Nigeria needs $10 billion in private investment in the power sector over the next five to 10 years to achieve a 24-hour power supply for the majority of the population.
