Nigeria’s power sector at a crossroads: Why AI, market reforms and political will must power our industrial future

Few sectors have shaped Nigeria’s economic fortunes as profoundly as the electric power sector. Yet, few have also generated as much disappointment.

Having served as Executive Director (Finance & Accounts) of the Transmission Company of Nigeria (TCN) between 2013 and 2017, following my appointment by the federal government during the landmark power sector reforms, I had a front-row seat to the opportunities and constraints of Nigeria’s electricity market. Since leaving office, I have continued to write extensively, grant television interviews, and engage policymakers on practical solutions to the challenges confronting the sector. My articles, including The Solutions to Nigeria’s Electric Power Challenge (2019), Preventive Fire Outbreaks in the Transmission Company of Nigeria (2023), The Need to Concede or Privatise the Transmission Company of Nigeria (2023), and A Decade After Power Sector Privatisation: Lessons for Nigeria’s Electricity Market (2025), have consistently argued that Nigeria’s power crisis is fundamentally a governance, investment and technology challenge rather than merely an engineering problem.

More than a decade after the privatisation of the Generation Companies (GenCos) and Distribution Companies (DisCos) in 2013, one critical component of the electricity value chain remains entirely under federal government control: the Transmission Company of Nigeria (TCN). This reality has significant implications for the efficiency and reliability of the Nigerian electricity supply industry.

The 2013 reforms were intended to create a competitive electricity market capable of attracting private investment, improving operational efficiency and delivering reliable electricity to consumers. While ownership of the GenCos and DisCos changed hands, the transmission network remained a government-owned monopoly. Today, TCN continues to serve as the sole transmission backbone linking electricity generators to distributors. Any weakness within this critical infrastructure reverberates across the entire electricity value chain.

Nigeria’s electricity deficit

The stark reality is sobering.

Nigeria, with a population exceeding 230 million people, struggles to deliver between approximately 5,000 and 6,000 megawatts of available electricity on many days. By comparison, South Africa, with roughly one-quarter of Nigeria’s population, has an installed generation capacity exceeding 50,000 MW, despite facing its own operational challenges in recent years. China and India have expanded their electricity systems dramatically over the past three decades, supporting rapid industrialisation, urbanisation and technological innovation. Reliable electricity has been one of the principal foundations of their economic transformation.

Electricity is no longer simply a social service. It is the fuel of modern economies.

The challenges are well-known

Nigeria’s electricity challenges are multidimensional.

The first is inadequate investment. Transmission infrastructure has not expanded at the pace required to accommodate increased generation capacity. Transmission lines, substations and transformers require continuous upgrading and expansion.

The second is the persistent liquidity crisis across the Nigerian electricity supply industry. Cost-reflective tariffs remain politically difficult, leaving the sector underfunded. Revenue leakages cascade through the market, with DisCos struggling to recover costs, GenCos facing delayed payments, gas suppliers remaining unpaid, and TCN operating under financial constraints.

Third is ageing infrastructure. Significant portions of the national grid were designed decades ago and were never intended to support today’s population and level of electricity demand.

Fourth is vandalism and sabotage. The deliberate destruction of transmission towers and theft of conductors, transformer oil, cables and other strategic equipment have become economic crimes against the Nigerian people. Every act of vandalism delays industrial growth, discourages investment and imposes enormous replacement costs on taxpayers.

Fifth is corruption and entrenched vested interests. The electricity market cannot thrive where contractual obligations are ignored, procurement lacks transparency, or reform is subordinated to political patronage.

Finally, implementation has often been our weakest link. Nigeria has produced numerous excellent policy documents, but implementation has consistently lagged behind policy formulation.

The presidential power initiative must succeed.

The Presidential Power Initiative (PPI), launched in partnership with Siemens Energy, represents one of the most important opportunities to modernise Nigeria’s transmission and distribution infrastructure. If implemented with discipline, transparency and continuity, it can significantly improve grid reliability, reduce technical losses and increase transmission capacity.

However, no infrastructure programme succeeds without sustained political commitment, predictable funding and professional project execution.

AI can transform Nigeria’s power sector

As someone deeply involved in artificial intelligence research today, I believe AI offers Nigeria its greatest opportunity to leapfrog decades of underinvestment.

Artificial intelligence can modernise virtually every component of the electricity value chain.

Smart sensors can continuously monitor transmission equipment, detecting faults before they result in outages. Machine learning models can predict equipment failures weeks in advance. AI-powered digital twins can simulate grid performance before infrastructure investments are made. Computer vision can identify vegetation encroachment and monitor transmission corridors. Drones equipped with AI can inspect hundreds of kilometres of transmission lines far more efficiently than manual inspections.

AI can also optimise electricity dispatch, forecast demand with remarkable accuracy, improve maintenance scheduling, reduce technical losses and strengthen cybersecurity against increasingly sophisticated attacks.

The grid of the future will not merely transmit electricity; it will become an intelligent, self-monitoring and self-healing digital infrastructure.

There are lessons from other countries.

Several countries demonstrate that electricity transformation is possible.

India embarked upon extensive reforms involving generation expansion, competitive markets, transmission strengthening and nationwide electrification. Today, it has become one of the world’s largest electricity producers.

China invested massively in ultra-high-voltage transmission networks, integrating generation from distant regions while supporting rapid industrial growth.

Turkey liberalised significant portions of its electricity market, encouraged private investment and dramatically improved supply reliability.

Spain modernised its transmission system while becoming a global leader in renewable energy integration through sophisticated grid management technologies.

These countries did not achieve success through infrastructure investment alone. They combined long-term policy consistency, regulatory certainty, private capital, technological innovation and professional execution.

Nigeria can do the same.

Market forces must complement government

The government cannot fund the electricity sector indefinitely.

The role of government should increasingly focus on creating a stable regulatory environment, enforcing market rules, protecting critical infrastructure and ensuring fair competition.

Private capital, both domestic and international, must become the principal driver of investment in generation, transmission and distribution.

In my previous writings, I have argued that Nigeria should continue the structural reforms of TCN, including implementing the long-planned separation of the Transmission Service Provider (TSP) and the Independent System Operator (ISO), while opening appropriate segments of the transmission business to greater private sector participation under robust regulation.

The economic dividend and rewards of reliable electricity would be transformational.

-Manufacturing would become globally competitive.

-Small businesses would reduce dependence on diesel generators.

-Foreign direct investment would increase.

-Artificial intelligence, data centres, cloud computing and advanced manufacturing would flourish.

-Agricultural processing would expand. Millions of new jobs would be created.

-Healthcare and education would improve significantly.

-Nigeria’s GDP growth could accelerate substantially as energy constraints are progressively removed.

Nigeria possesses a vibrant banking and financial sector, abundant natural gas, enormous renewable energy resources, an entrepreneurial private sector and one of Africa’s largest domestic markets. What has been missing is sustained execution.

The national grid, in many respects, remains antiquated. It must be transformed into a modern digital electricity network capable of supporting a twenty-first-century economy.

The government must provide adequate funding where appropriate, but more importantly, it must create the policy certainty that attracts long-term private investment. Market rules and the Grid Code must be respected. Contracts must be honoured. Vandalism must be treated as economic sabotage. Technology must become central to every reform.

If we combine artificial intelligence, private capital, sound regulation and political discipline, Nigeria can finally unlock its immense economic potential.

Electricity is not merely another sector of the economy.

It is the foundation upon which every modern economy is built.

Nigeria’s industrial future depends on getting its power sector right. And this is where AI can assist.

Sonny Iroche was executive director (finance & accounts) of the Transmission Company of Nigeria. He is an Oxford-trained AI expert and a member of the Technical Working Group of the UNESCO AI Readiness Assessment Methodology. And a member of Nigeria’s National AI Strategy Committee.