Nigeria’s power sector: The goose that eats the fattest but lays no egg

Since the return to democracy in 1999, Nigeria’s power sector has absorbed staggering levels of public expenditure, repeatedly framed as decisive reform. Each intervention has been presented as the long-awaited solution to a persistent national crisis. However, taken together, these efforts reveal a troubling pattern: a sector that consumes extraordinary public resources without delivering commensurate public value. Nigeria’s power sector is exactly like the proverbial greedy, fat but ultimately barren goose, steadily consuming vast fiscal nourishment while producing neither stability nor sufficiency in electricity supply.

A review of these reform cycles reveals not just a history of spending, but a consistent gap between expectation and outcome. Under President Olusegun Obasanjo, the Agagu–Imoke era saw an estimated $10 billion – $16 billion invested in rehabilitation and emergency generation, with expectations of restoring supply toward 4,000 – 10,000 MW. However, weak accountability between expenditure and output resulted in only marginal and unsustained improvements. This disconnect informed the Electric Power Sector Reform Act, which unbundled the Power Holding Company of Nigeria into successor entities. Rather than resolving structural constraints, the reform introduced new financial burdens such as labour settlements, stranded assets, and legacy liabilities running into billions of dollars.

Alongside this restructuring, the National Integrated Power Projects (NIPP), funded through the Excess Crude Account, committed an estimated $8–10 billion to rapidly expand generation capacity. While NIPP aimed to add 4,000–5,000 MW, persistent gas supply shortages and weak transmission infrastructure meant that much of this capacity could not be effectively delivered to the grid. The result was a familiar pattern: installed capacity increased on paper, but usable electricity remained constrained, with actual supply largely stuck within the low gigawatt range.

The reform trajectory reached a critical turning point under President Goodluck Jonathan, with the 2013 privatisation of the sector. Led in part by Barth Nnaji and later implemented under Chinedu Nebo, the reform aimed to transition Nigeria from state-led inefficiency to a privately driven electricity market. The expectation was clear: improved efficiency, cost-reflective tariffs, and a steady rise in supply. In practice, these outcomes did not materialise. Instead, privatisation exposed deeper structural weaknesses – gas constraints, transmission bottlenecks, and chronic liquidity shortfalls. Rather than withdrawing, the state remained deeply entangled, continuing to sustain the sector through guarantees, subsidies, and financial interventions.

In the post-privatisation period, fiscal exposure has escalated significantly. The Central Bank of Nigeria alone has provided over N1.7 trillion in support, while tariff shortfalls and subsidy mechanisms account for an additional N3–4 trillion. Complementary interventions, including the World Bank-supported Power Sector Recovery Programme and the Siemens AG-backed Presidential Power Initiative, have added further multi-billion-dollar commitments. Despite these efforts, electricity supply has remained largely stagnant at roughly 3,000–5,000MW.

Taken together, conservative estimates place total commitments since 1999 at over $30–40 billion, alongside several trillions of naira in recurrent support. Yet the output has remained disproportionately low. This is profoundly mindboggling. Objectively, across the critical transition from state-led reform to a privatised electricity market, key actors such as Barth Nnaji, Sam Amadi, and later Babatunde Fashola each advanced substantive reform efforts aimed at stabilising and rationalising the sector.

These efforts combined reflect a sequence of deliberate and technically grounded attempts to make the electricity market function. Nigeria’s power sector has however followed what can be described as a “capacity illusion curve,” in which large-scale public spending and repeated institutional interventions have failed to translate into proportional electricity delivery to end users. The persistence of supply instability, financial fragility, and limited transmission points to a deeper structural condition in which reforms, however well-conceived, are repeatedly absorbed without producing commensurate system-wide transformation.

It is this persistent decoupling of input and output that ultimately reframes the problem as one of design, incentives, and governance in Nigeria’s electricity system rather than funding alone. The lens then shifts from the scale of expenditure to the system’s underlying logic. Even during the period of heightened regulatory reform under Sam Amadi at the Nigerian Electricity Regulatory Commission, when transparency, tariff discipline, and market rules were most actively pursued, significant aspects of the sector’s operations remained opaque, underscoring the persistence of deeper structural constraints.

This scrutiny is particularly pertinent following presidential approval of a N3.3 trillion plan to settle legacy debts in Nigeria’s power sector, accumulated between 2015 and 2025 under the Presidential Power Sector Financial Reforms Programme. The key question is whether this intervention marks a genuine turning point or another iteration of a familiar cycle. The plan aims to clear obligations across the value chain, improve liquidity, stabilise generation, and restore investor confidence. In policy terms, the logic is coherent. However, concerns remain that it reflects a recurring pattern where the binding constraint lies less in funding than in institutional and political economy structures that limit impact.

Given the sector’s history, the current Minister must clearly explain this intervention and its cost structure. Accountability requires the federal government to publish beneficiary operators and approved sums and the share translating into actual electricity delivery. Operators should also publicly declare their revenues and profits or losses. Anything short of this will simply reinforce the deliberate opacity of the power sector’s design. Ultimately, if this latest intervention again fails to deliver on its promise, where does accountability reside? Who is accountable if the goose fails to lay eggs next time?