Nigeria’s Power Sector In 2024: Challenges Of GenCos Debt, Grid Collapses, And Missed Goals

2024 marked another challenging year for Nigeria’s power sector, plagued by N2.7 trillion GenCos debt, grid collapses, and unmet electricity supply targets. Learn more about the ongoing hurdles and what experts are saying.

An Overview of Nigeria’s Power Sector in 2024

2024 marked 11 years since Nigeria partially privatized its power sector, a move initially designed to enhance investments, improve service delivery, and resolve longstanding electricity shortages. Yet, despite these intentions, the challenges that have stunted the sector’s progress remain entrenched.

According to World Bank data, over 80 million Nigerians still lack access to electricity, most of whom live in rural areas. Despite having an installed generation capacity of 13,000MW, Nigeria’s average power output hovers just above 4,000MW. This persistent gap undermines efforts to improve supply, leaving many in darkness.

Key Challenges in 2024

1. Mounting Debts Crippling GenCos
The sector’s financial woes are deeply rooted in the enormous debt owed to Generation Companies (GenCos). By August 2024, the debt had reached an alarming N2.7 trillion, with payments covering only 20.96% of invoices submitted by GenCos.

Dr. Joy Ogaji, Executive Director of the Association of Power Generation Companies, highlighted that these debts severely hinder the GenCos’ ability to operate efficiently. Industry leaders like Tony Elumelu called for full privatization and the settlement of outstanding debts to restore liquidity and stabilize electricity supply.

2. Grid Collapses Highlight TCN’s Weaknesses
The Transmission Company of Nigeria (TCN), the sole government-owned entity in the supply chain, recorded 12 grid collapses in 2024. Despite spending over $7.5 billion on infrastructure, the transmission segment remains the weakest link.

Issues like vandalism and sabotage compound these challenges, with over 115 transmission towers destroyed by the end of November. Experts have called for urgent interventions to protect infrastructure and improve TCN’s operational model.

3. Discriminatory Tariff Policies and Lack of Metering
In April 2024, the Nigerian Electricity Regulatory Commission (NERC) introduced a new tariff structure for Band-A customers, promising 20 hours of daily supply. While this boosted revenue collection, many customers reported not receiving the promised hours of electricity.

Additionally, metering remains a significant issue, with over 55% of registered customers still relying on estimated billing. This has led to widespread exploitation, further eroding public trust.

What Experts Are Saying

Experts agree that 2024 has been a disappointing year for Nigeria’s power sector.

Professor Adeola Adenikinju criticized the outdated infrastructure and vandalism, assigning a “red” grade to the sector’s performance.
Mr. Kunle Olubiyo, President of the Nigeria Consumer Protection Network, decried discriminatory policies and the failure to meet metering promises.
Mr. Lanre Elatuyi noted that inefficiencies in the payment structure continue to undermine GenCos’ financial health.

Conclusion: The Way Forward

For Nigeria’s power sector to overcome its persistent challenges, stakeholders must prioritize resolving the financial crises, investing in infrastructure, and ensuring fair and efficient policies. Full privatization, improved grid management, and a robust metering strategy could be vital steps toward achieving the elusive goal of stable electricity supply.

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