The Federal Government has announced plans to sanction underperforming electricity distribution and generation companies as part of a broader reform programme aimed at improving power supply and driving industrial growth.
Minister of Power, Joseph Olasunkanmi Tegbe, disclosed the plan in a policy brief presented by his Special Adviser, Martins Olajide, at the Nigerian Economic Summit Group industrialisation and competitiveness forum.
Tegbe said the Ministry of Power was introducing performance scorecards covering electricity sector employees, Distribution Companies (DisCos) and Generation Companies (GenCos) to strengthen accountability across the power value chain.
Under the framework, high-performing operators would be rewarded, while companies that fail to meet established operational benchmarks would face sanctions.
The minister said the initiative forms part of an eight-point agenda focused on stabilising the national grid, restoring discipline in the electricity market and strengthening governance within the sector.
The Federal Government is also pursuing tariff reforms designed to protect vulnerable electricity consumers while ensuring that market participants meet their contractual supply obligations.
Tegbe highlighted the scale of inefficiencies within Nigeria’s electricity system, noting that the country has 13,625 megawatts (MW) of installed grid capacity, while average daily generation stands at only 4,854MW.
This means about 62 per cent of installed capacity remains unused, even as peak electricity demand is estimated at approximately 20,000MW.
According to the minister, the persistent gap between installed capacity, actual generation and demand has imposed a significant financial burden on households and businesses.
He said self-generation cost Nigerians an estimated N16.5 trillion in 2023, compared with about N1 trillion generated through the national grid.
Citing World Bank data, Tegbe said recurring electricity shortages cost the Nigerian economy approximately $25 billion annually, equivalent to between five and seven per cent of the country’s Gross Domestic Product.
To improve transmission reliability, the government plans to strengthen critical electricity corridors, including the Lagos, Enugu-Port Harcourt and Abuja-Kaduna-Kano transmission routes.
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Lagos is expected to serve as the initial proof of concept for the broader grid stabilisation strategy before the approach is expanded to other parts of the country.
The reform programme will also target technical and commercial losses, accelerate nationwide electricity metering and improve the utilisation of power assets within designated economic clusters.
The government said optimising electricity infrastructure around these industrial clusters would help attract private investment, improve productivity and strengthen Nigeria’s industrial competitiveness.
The planned sanctions and performance-based reforms signal a tougher regulatory approach as the government seeks to close the gap between Nigeria’s existing power infrastructure and the electricity required to support economic expansion.
