Search for Viability in Nigerian Electricity Supply Industry: Data to the Rescue

James Kolawole

Since the privatization of Nigeria’s power sector particularly the distribution segment, there has been a continuous wave of actions, debates, and policy shifts aimed at addressing the sector’s persistent and seemingly intractable challenges. The privatisation process in 2013 itself has drawn scrutiny, with concerns raised about investor capacity, operational inefficiencies, and the urgent need for recapitalization of the Distribution Companies (DisCos).

In response, various stakeholders have proposed radical reforms ranging from partial restructuring to complete takeover from current operators. Meanwhile, government interventions have largely followed a piecemeal approach, with sporadic efforts to inject liquidity and establish a framework for sustainable financial stability within the NESI. Despite these efforts, the sector remains insolvent and grapples with systemic issues.

To contextualise the challenges facing the Nigeria Electricity Supply Industry (NESI), it is essential to understand its structural composition. The NESI value chain comprises the following key components segments: Gas Suppliers (for thermal power plants), Power Generation Companies (GenCos), Transmission Company of Nigeria (TCN), and Electricity Distribution Companies (DisCos).

Electrons flow from upstream (generation, using gas & hydro) to downstream (distribution and end-users), while ideally, cash flows in the reverse direction from consumers through DisCos, TCN, up to GenCos and gas suppliers to fulfill financial obligations across the value chain.

However, this ideal cash flow model has rarely materialised since the sector’s privatization and the blaze of reforms in the past 12 years. Notwithstanding the privatisation of 2/3 of the NESI (DisCos & GenCos), the Federal Government has not ceased to inject funds running into tens of trillions of Naira into the market. Unfortunately, these interventions have had very limited impact on the NESI and the Nigerian economy. Consumers continue to bear the brunt of inefficiencies and insufficiency, unreliable supply, and rising costs, with the sector still financially fragile and operationally constrained.

While it is generally agreed that one of the biggest challenges in NESI today is the paucity of funds required to drive network expansion and a sturdy sector, critical stakeholders such as policy makers and operators of the market do not seem to have paid sufficient attention to data as a critical success factor for the market. It is therefore not surprising that the various solutions proposed and applied have not produced the desired result because whatever solution that is proposed that does not give data a pride of place is like pouring water in a  basket – it is nothing but a sinkhole and that is what we have seen in the sector in the last 12years of privatisation. 

Fixing any aspect of the NESI – liquidity, commercial, technical, manpower optimisation will be a mirage if policy instruments are based on  assumptions, sentiments, or fragmented interventions. The crystallization of a successful NESI requires full visibility into the entire value chain – from gas supply and generation to transmission and distribution through the engagement of accurate, real-time data, so that stakeholders are not left navigating blind spots, making decisions that lack precision and impact. Data is not merely about crunching numbers; it is about generating ideas, revealing patterns, and enabling insight-driven actions. In today’s energy landscape, data is the most powerful problem solver. It empowers utilities to optimize operations, regulators to enforce accountability, and investors to make informed commitments. Data has emerged as a defining force of the 21st century – a true superpower across industries and disciplines. From oil and gas exploration, where seismic data guides drilling decisions, to modern warfare, where intelligence and real-time analytics shape strategy, data has transformed how we understand and act on the world around us. 

It played a pivotal role in fighting COVID-19, enabling contact tracing, vaccine development, and resource allocation. In combating air pollution, data from sensors and satellites inform policy and public health interventions. In navigation, it powers GPS systems and autonomous vehicles. In agriculture, it drives precision farming, optimizing yields and resource use. And in utilities, especially the electricity sector, data enables grid stability, loss reduction, and customer engagement. Data is not just about numbers – it’s about insight, foresight, and action. It is the invisible infrastructure behind innovation, resilience, and progress.

For a passionate advocate of a data-driven NESI transformation, it is imperative that the DisCos- the financial engine of the NESI, begin to fully harness the vast volumes of data generated. Not speculative or manipulated data but real-time and reliable data captured every second, every minute, and every hour across their operational landscape through robust and reliable communication platforms. In the view of Sherlock Holmes, “it is a capital mistake to theorize before one has data” 

These data, when captured through a robust and reliable communication infrastructure, hold the key to unlocking the financial stability the sector so desperately needs. From real-time consumption patterns and network performance to customer behavior and loss detection, data offers actionable insights that can drive smarter billing, reduce non-technical losses, targeted investments, operational efficiency, and ultimately, revenue assurance.
The DisCos generate vast amount of operational data, with meter data serving as a critical starting point for revenue protection and optimization of operations. To fully harness this potential, DisCos must invest not only in smart meters but in truly world class communication infrastructure and advanced analytics. The recent smart metering initiatives by the Federal Government, while a step in the right direction, have largely lacked the strategic coherence of a national policy framework.

Successive administrations have treated smart metering as a tool to bridge the metering gap, rather than as a strategic instrument for financial transformation within the Nigeria Electricity Supply Industry (NESI).

A well-planned smart meter rollout, underpinned by a robust and reliable communication platform for acquiring real-time data, has the potential to do far more than just count kilowatt-hours. It can help: Reduce non-technical losses significantly, Optimize operational efficiency, Improve customer service experience, Enhance energy efficiency, and Reinforce revenue assurance.

If  DisCos are to become the financial engine of NESI, they must begin to treat data not as a byproduct of operations, but as a strategic asset – one that can unlock liquidity, restore investor confidence, and drive sustainable growth across the sector. “Data is light in a dark room”.

*James Kolawole, Data and Communications Expert