Over the past decade, the Nigerian Electricity Supply Industry (NESI) (“the Industry”), has undergone significant transformations in its market structure, regulatory environment and institutional framework. A key development was the shift from a state-run model to a more commercially competitive enterprise. In 2013, Nigeria’s power infrastructure was privatised, transferring ownership to private investors, marking a pivotal moment in the Industry’s operational dynamics and growth potential. However, despite substantial capital investments in electricity development, the Industry remains burdened by historical cash deficits, outdated infrastructure, and weak contract enforcement. These persistent challenges hinder operators’ ability to secure a fair return on investment, leading to the significant under-utilisation of capacity across the entire value chain.
In a bid to enhance market discipline, the Electricity Act of 2023 was enacted, replacing the Electric Power Sector Reform Act (EPSRA) of 2005. This legislation aims to bolster the regulatory framework, providing the Nigerian Electricity Regulatory Commission (NERC) with enhanced oversight powers to monitor market transactions. This regulatory shift was accompanied by a tariff rate increase for customers in Service Band A, designed to mitigate liquidity risks and guide the Industry towards commercial viability.
Looking ahead, we expect further improvements in market discipline, driven by this business-friendly legislation and the commencement of bilateral contracting, which should enhance commercial efficiency. If sustained, these efforts are likely to increase electricity supply and enable more optimal utilisation of capacity across all operational segments. Nevertheless, the Industry’s growth prospects remain tempered by the poor financial health of operators, constrained fiscal space, and weakened consumer purchasing power – major risk factors that could impede the long-term development of the sector.
This report includes:
We believe the information, analyses and opinions contained in this report will prove indispensable to;
