On a sweltering evening in Lagos, the sound of generators drowns out the quiet hum of the neighbourhood.
Diesel fumes mix with the smell of fried plantain from a roadside stall as children do their homework under the dim glow of a rechargeable lamp.
For most Nigerians, this is the true face of electricity 12 years after the government handed the power sector to private investors.
Back in 2013, the country celebrated what was described as a bold reform.
The state-run Power Holding Company of Nigeria (PHCN) was unbundled and sold off in pieces.
Government officials promised the end of blackouts, cheaper power, and foreign investment that would revolutionise Africa’s largest economy.
Instead, what followed has been years of failed promises.
Supply has barely improved, tariffs have risen sharply, and ordinary citizens still depend on fuel, diesel, and solar panels to light up their homes.
What privatisation has done, however, is create a new class of electricity barons.
Owners of distribution companies, cushioned by tariff increases and regulatory loopholes, have become wealthier even as households and businesses sink deeper into energy poverty.
As one World Bank report put it bluntly, Nigeria has one of the highest electricity access deficits in the world, with more than 85 million people completely off-grid.
Twelve years on, the question remains: did Nigeria privatise its power sector to serve the people, or to enrich a few?
The undelivered promises of privatisation
In 2013, the then administration of President Goodluck Jonathan concluded the sale of 17 state-owned electricity companies.
Eleven distribution companies (DisCos) and six generation companies (GenCos) were handed over to private owners.
The transmission company was kept under government control but managed by Manitoba Hydro International of Canada for a period.
The argument was simple: the government had failed to deliver reliable power, so private investors would bring efficiency, capital, and expertise. The reform was hailed as historic.
At the time, then Minister of Power, Professor Chinedu Nebo, described it as “the single largest privatisation in Africa.”
The World Bank, IMF, and several donor agencies supported the move, convinced that a liberalised sector would unlock billions of dollars in investment.
Nigerians were hopeful too.
After decades of epileptic supply under NEPA and later PHCN, the promise of private sector efficiency raised expectations. Officials spoke of achieving 40,000 megawatts by 2020, enough to power industries, homes, and schools across the country.
But optimism soon gave way to frustration.
Many of the new owners lacked the technical capacity or financial muscle to overhaul a deeply broken system.
Several relied on bank loans to acquire the assets, leaving them saddled with debts from the start.
Others had political connections but little knowledge of running an electricity company.
The result was predictable: service did not improve. Blackouts persisted, while tariffs went up. What Nigerians saw was a transfer of ownership, not a transformation of outcomes.
The few winners of the reform
However, the reforms are not without winners. Some people saw their fortunes change overnight because of privatisation.
The exercise attracts major investors into the space and brings in new players. But it also promotes favoritism, nepotism, and alleged corruption.
A closer look at the beneficiaries of privatisation reveals a pattern.
Many of the DisCos were acquired by consortia linked to Nigeria’s political and business elite. It was less about competitive bidding and more about who had access to power at the time.
Take the Abuja Electricity Distribution Company, acquired by a consortium led by KANN Utility. Or Eko Disco, linked to investors with long-standing influence in Lagos politics.
The story was similar across the country.
Instead of bringing in global players with technical know-how, the process largely recycled local oligarchs who were more interested in rent-seeking than reform.
Some international companies initially showed interest. Siemens signed agreements with Nigeria to revamp the grid, while General Electric explored opportunities.
But the lack of transparency and the scale of the sector’s problems discouraged most of them.
In 2013, Reuters reported that many foreign firms had scaled down their exposure, wary of Nigeria’s regulatory uncertainty.
The outcome has been a sector where profits are privatised but losses socialised.
DisCos have regularly declared that Nigerians owe them billions in unpaid bills.
Yet, the bills are often based on estimated consumption rather than actual metering. Investors pass their inefficiencies onto consumers, who have little choice but to pay.
Meanwhile, tariff adjustments sanctioned by the Nigerian Electricity Regulatory Commission (NERC) have tilted in favour of the companies.
In April 2024, the regulator approved a 300% increase for Band A customers, those who supposedly enjoy at least 20 hours of supply daily.
While this enriched the DisCos, many customers in reality received far less power than promised, effectively paying more for darkness.
The biggest winners, then, have been the investors who acquired assets cheaply in 2013 and now sit on companies shielded from real competition.
Instead of innovation, the sector has entrenched monopolies. Nigerians can choose their mobile phone operator, but they cannot choose their electricity provider.
The ordinary Nigerians in the dark
For ordinary citizens, the dream of stable power has remained elusive.
Nigeria, with over 200 million people, still generates less than 5,000MW on most days, according to figures consistently cited by the Transmission Company of Nigeria.
By comparison, South Africa, with one-quarter of Nigeria’s population, has an installed capacity of over 50,000MW, even amid its struggles with load shedding.
The gap between promise and reality is most visible in homes and businesses.
Families spend heavily on alternative power.
A 50-litre of diesel costs around N65,000 ($42), and most households consume it weekly if they rely on generators. Petrol, though cheaper, is still a burden for families already stretched by inflation.
This reliance on self-generation has created another divide.
Wealthier Nigerians are increasingly turning to solar and inverter systems, with rooftop panels dotting middle-class neighbourhoods in Lagos, Abuja, and Port Harcourt.
For them, privatisation has simply meant paying more for official supply while investing privately in alternatives.
But for millions of low-income households, especially in rural areas, the story is starkly different.
Many villages remain entirely unconnected to the grid, surviving on kerosene lamps and firewood.
For example, the Center for Strategic and International Studies notes that Nigeria accounts for 12% of the global population without access to electricity.
It is a sobering reminder that privatisation did not widen access; in many ways, it cemented exclusion.
Businesses, too, have borne the brunt. Small and medium enterprises, the backbone of Nigeria’s economy, spend a significant portion of their revenue on power.
A barber in Kano pays more for diesel than he earns in haircuts, while cold room operators in Delta struggle to preserve fish as outages become routine.
Larger industries, from cement to steel, often run their own captive power plants, adding costs that reduce competitiveness.
The wider economy suffers.
The World Bank estimates that Nigeria loses around $26 billion annually due to unreliable power. Investors shy away, job creation slows, and productivity drops. For a country seeking to industrialise, the power crisis is more than an inconvenience—it is a major roadblock.
Can the sector still be rescued?
Twelve years after privatisation, Nigeria is once again at a crossroads. The government of President Bola Tinubu has signalled its intention to confront the crisis.
In 2024, subsidies were reduced, tariffs adjusted, and renewed emphasis placed on metering customers. Officials argue that without cost-reflective tariffs, investors cannot sustain operations or invest in new capacity.
Yet the danger is that reforms once again prioritise the investors rather than the consumers.
Higher tariffs in a country with widespread poverty can deepen inequality, pushing reliable electricity further out of reach for millions. Unless matched with real improvements in service, the policy risks fuelling unrest.
Some experts believe the model itself was flawed from the start. Unlike in telecoms, where competition drove down prices and improved service, electricity distribution was privatised into regional monopolies.
Nigerians cannot switch providers if they are dissatisfied, leaving them trapped. Without restructuring, the sector may never deliver.
Others argue that lessons can be drawn from abroad.
In Kenya, reforms included strong regulatory oversight and independent power producers competing in generation.
In Egypt, massive investment in gas and renewables has doubled capacity within a decade.
South Africa, despite Eskom’s troubles, has opened the market to private renewable developers, a move that is gradually easing load shedding.
For Nigeria, the path forward may require breaking up the monopolies, enforcing transparency, and attracting genuine foreign investors with technical expertise.
It also means addressing the structural weaknesses of the grid. Transmission remains a bottleneck; without expanding it, even increased generation cannot reach consumers.
Renewable energy offers hope too.
Nigeria has abundant sunlight and gas reserves that can be leveraged for cleaner, decentralised power. But without policy consistency and a crackdown on vested interests, these opportunities may slip away.
Let’s think deeper
When the lights first flickered under private ownership in 2013, many Nigerians believed they were witnessing the dawn of a new era. Twelve years later, the reality is dimmer.
A few investors have grown wealthier, shielded by favourable tariffs and weak regulation, while millions of citizens remain in darkness.
Privatisation was supposed to deliver reliable electricity and unlock industrial growth. Instead, it has exposed the dangers of reforms designed for the powerful rather than the people.
Nigeria still has the chance to fix its power sector, but it will require courage, transparency, and a willingness to confront entrenched interests.
Until then, the nightly chorus of generators will remain the country’s unofficial national anthem, a noisy reminder that privatisation made some rich but left others struggling to keep the lights on.
