ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Power Sector Reforms in Nigeria

Updated on March 11, 2014
Click thumbnail to view full-size

Electricity generation, transmission, and distribution is carried out by a public utility, National Electric Power Authority (NEPA) established in 1972.

Over the past decade, electricity supply in the country has been characterized by low installed capacity, inadequate, irregular and unreliable electricity supply.

Some of the problems encountered by NEPA included the huge supply-demand gap, aging infrastructures and workforce and lack of appropriate investment in network capacity development and expansion.

[1] In a bid to revive the ailing electricity sector, the government in 2002 adopted the Nigerian Electricity Power Policy which laid the framework for the drafting of a legal reform for the sector and recommended the development of a wholesale electricity market and establishment of an independent sector regulatory agency[2].

Click thumbnail to view full-size

The implementation of the National Electricity Power Policy by the government culminated in the enactment of the Electricity Power Sector Reform Act in 2005[1]. The legislation seeks to restructure the electricity sector by removing government control of the sector, privatization of NEPA and enabling private companies to participate in the generation, transmission, distribution and supply of electricity.

It also establishes a regulatory authority, National Electricity Regulatory Commission (NERC) whose main duties are the licensing of private companies to engage in electricity generation, transmission and distribution and the setting of rules, structures and standards in the sector.

The basic aim of the reforms is to attract foreign and private equity investment into the network capacity development of the sector.

Implementation of the reforms began with the unbundling of NEPA in May 2005 and transfer of its assets, liabilities and staff to a holding company, Power Holding Company of Nigeria (PHCN) incorporated in 2005.

A total of 18 successor companies are expected to emerge from PHCN assets at the end of the reform programme, broken down as follows:

  • Six generation companies (GENCOS)
  • Eleven Distribution companies (DISCOS), and
  • One Transmission company

These companies will take over the assets, liabilities and staff of PHCN at the end of the unbundling process of the company and will be managed based on investment agreements signed with the government, with the government retaining some equity shares in these companies.

The GENCOS are to be managed on a 25 year concession agreement by private investors while the DISCOS and transmission company are to be managed based on a minimum 51 percent core investor agreement[1].

What is the growth percentage of the Nigeria power sector ?

See results

The GENCOS comprise of four gas-fired thermal plants in Ughelli, Geregu, Afam and Sapele; and two hydro plants in Kainji and Shiroro which were all previously owned by the government but will now be privatized and managed by private investors.

The country is divided in eleven distribution zones with one DISCO managed by a private investor for each zone.

The government has lined up several incentives to lure private investors to invest in the sector. These include-

i. New Commercial Multi-year Tariff Order (MYTO)

ii. Five year tax holiday for the private investors

iii. Duty exemption for equipment for gas fired GENCOS

iv. Partial Risk Guarantees (PRGs) for all GENCOS

v. DISCO tariffs to be supported by PRGs[1]

The timetable for the completion of the reform process indicates that all bidding and negotiations for privatization of the GENCOS and DISCOS would be completed in December 2011/January 2012.

While it is still early days to analyze or forecast the success or otherwise of the reform programme of the government, based on the implementation of the project so far, there is little doubt that the restructuring process will significantly transform the electricity sector and improve access to electricity in the country in view of the planned expansion of grid networks and distribution lines incorporated in the reform plans which will ensure quality supply of electricity at fair, just and cost-reflective tariffs in accordance with the sustainability objectives of access to electricity.

  1. S. Amadi, “NERC: Unbundling the Nigerian Electricity Sector: Update on Economic Regulation” paper presented at the African Energy Forum, Paris 2011
  2. National Electric Policy Plan, 2002 accessed on 13th January 2012 at 16:25 GMT
  3. Electricity Power Reform Act, 2005, Laws of the Federation of Nigeria 2005
  4. NERC 2010, last accessed on 13th January 2012 at 18:45 GMT
  5. Supra

© 2014 elijagod


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)