Nigeria’s Power Sector: Why Innovation, Not Resignation, Will Light Up Our Future

Peter Ikenga

Global electricity demand is growing at one of the fastest sustained paces in a decade. According to the latest report by the International Energy Agency (IEA), this shift, largely driven by AI data centres, industrial electrificatioAn, and severe heatwaves, is projected to increase annual consumption by 3.3 percent to 3.9 percent.

In developing countries, especially Nigeria, our relationship with electricity is peculiar. We measure our days by the relief of a restored line, and the quiet calculation of whether the power supply will hold long enough to finish what we started. For a nation of our ambition, energy, and youthful population, this should not be our normal. The good news is that it does not have to remain so.

I do not intend to add to the long catalogue of complaints about our power sector. As someone who has spent a career in the energy sector and leading one of Nigeria’s leading power generation companies, Transcorp Power Plc, I believe the more useful conversation is about what is holding us back, and what those of us inside the industry must do differently. The truth is that Nigeria’s power challenges are not mysteries.

They are well understood. What they demand now is execution, partnership, and a culture of innovation.

A Sector Under Pressure and A Government That Is Responding

It would be unfair to discuss our difficulties without first acknowledging the noble reforms by the Federal Government. The Electricity Act 2023 is one of the most consequential pieces of legislation our sector has seen in a generation. Decentralising the electricity market and empowering states to develop their own frameworks has opened the door to competition, local solutions, and fresh investment in ways the old, over-centralised model never could. The government has also moved to address legacy liabilities and attract private capital back into the value chain. These are serious steps, and they deserve recognition.

The foundation is being laid. But a foundation is not a finished building, and the constraints that remain are real. Three stand out. The first is gas supply. As present, Nigeria’s grid is overwhelmingly thermal with approximately 75 percent of electricity supplied to the national grid is generated by gas-fired power plants. This means power generation from these plants is only as available as the gas that feeds them. When gas supply is interrupted or constrained, generation falls, no matter how much available generating capacity the plant has.

The second is transmission and infrastructure security. Even when power plants generate, the electricity must travel uninterrupted to the end users. Vandalisation of transmission infrastructure and the fragility of the grid infrastructure means that the electricity generated by power plants- which the- often cannot reach the homes and businesses that need it.  The third is liquidity. The Nigerian Electricity Supply Industry (NESI) continues to suffer from a severe liquidity crisis. Due to several factors, including non-cost-reflective tariffs for most electricity consumers, unpaid subsidy commitments on the part of the Federal Government and significant technical, commercial and collection losses, the Distribution Companies (DisCos) collect significantly less revenue than is required to pay for electricity supplied. Given that DisCos are the revenue assurance base for the electricity value chain, the resultant payment shortfalls affect the entire value chain from Nigerian Bulk Electricity Trading Company (NBET) to Generating Companies (GenCos) to gas suppliers, manifesting in the form of mounting market debts, inadequate investments, recurring gas supply constraints, continued government intervention through subsidies and weakening investor confidence.

The familiar cycle of delayed payments across the power value chain weakens everyone’s ability to invest, maintain, and grow. These are not the failings of any single company; they are systemic, sector-wide realities that affect us all. Persistent gas supply limitations and ongoing transmission infrastructure challenges reduced the average power we delivered to the national grid in the first half of 2026. A decline in available generation capacity translated directly into financial performance, with revenue moderating to N181.97 billion in H1 2026, down from N205.81 billion in H1 2025.

Taken together, these outcomes demonstrate a simple but important reality: when the power sector underperforms, even its most resilient operators are impacted. Ultimately, we all operate within the same grid, and the strength of that system determines the performance of every participant within it.

 From Diagnosis to Solutions

Naming problems is easy. The harder, more important work is solving them, and here I want to be constructive.

On gas, the Federal Government needs to urgently create a Domestic Supply Obligation (DSO) dedicated to the power sector for all gas producers in Nigeria. This will ensure that the current scenario where GenCos struggle for gas supply with commercial entities (who pay higher gas prices) is reduced drastically and more gas made available to GenCos.

Furthermore, government needs to incentivise gas development for power generation, with additional incentives for GenCos to invest in gas-to-power development. Additionally, there is a need for firmer, better-structured supply agreements and continued investment to expand domestic gas transportation infrastructure, including pipelines and processing facilities that connect abundant gas reserves to our power plants.

Given the criticality of transmission infrastructure in determining the volume of electricity that is generated at any point in time, it is imperative that all transmission related challenges should be addressed in order of impact.  First, we must establish the actual capacity of existing transmission infrastructure through an independently conducted network or infrastructure audit. This will help establish what quick wins that can be targeted. Next, we must review existing transmission improvement initiatives, including the Presidential Power Initiative, and accelerate their implementation.

Transmission projects being handled by Niger Delta Power Holding Company (NDPHC) and those being handled by Transmission Company of Nigeria (TCN) should be supervised by a special team charged with the responsibility of delivering the projects within specified aggressive timelines.

A framework should be developed and implemented within the next 6 months for private sector participation in transmission. The enabling provisions of the Electricity Act for the concessioning of new and existing transmission lines should be implemented. This will attract the required private sector capital, expertise and efficient resource management into the transmission space. One of the benefits of the separation of Nigeria Independent System Operator (NISO) from TCN should be to reposition TCN as a transmission service provider that would attract private sector investors.

The Federal Government should declare a state of emergency regarding vandalism of Transmission Infrastructure across Nigeria and adopt an aggressive plan to tackle growing cases of vandalism of transmission infrastructure. Innovative approaches including using technology to monitor the infrastructure should be adopted. In the short run, effective engagement with each State and Local Government to provide security support through host communities supported by engagement of private security companies would help stem the tide.

On liquidity, the Federal Government should expeditiously conclude the payment of verified legacy debt owed to GenCos and gas suppliers through a structured financing mechanism. This will unlock liquidity to enable GenCos meet their obligations and invest in capacity recovery and reliability improvements and reliability of power generation, while gas suppliers will have the enablement and confidence to make the much-needed significant investments to develop new gas assets as well as overhaul and improve the production existing gas facilities.  

Government must thereafter stop the creation of new debt that would become legacy debt tomorrow. The issue of the appropriate market structure that would deliver a self-sustaining electricity market must be addressed urgently. If this is not done, we will continue with endless regime of legacy debt owed to GenCos, and by extension, gas suppliers.

As at today, it is not clear which market regime is being operated in NESI.  The liquidity state of NESI today is a pointer that the current market arrangement is not optimal. DisCos must continue the progressive upward movement of customers in Bands B – D with corresponding improvement in electricity supply by DisCos. Doing this will slowly reduce the aggregate tariff to end-users. This should also be complemented with targeted electricity subsidies benefiting only vulnerable consumers.    

Finally, a review the performance of each of the existing metering programmes should be conducted and accelerate universal metering to all consumers. If metering challenges are not successfully addressed, revenue assurance will never be achieved in the NESI.   

 What Innovation Looks Like on the Plant Floor

At our Transcorp Power plant in Ughelli, we operate in a demanding environment. The heat, humidity, and airborne particulates place constant strain on gas turbines, particularly on the air-intake filters that protect them. Clogged filters choke airflow, erode efficiency, and steal precious megawatts. Traditionally, replacing these air-intake filters meant shutting a unit down, losing significant output and revenue.

Our engineers, 100% Nigerians, refused to accept that as an unavoidable cost of doing business. By rethinking how and when filters are changed, optimising scheduling, and minimising the need to take units fully offline, our team substantially reduced the downtime from 2 – 3 days to under 3 hours per unit. The result is more available capacity from the same assets, more electricity to the grid, and more value preserved for the nation and our shareholders. It is a modest example, but a telling one. It shows that even within constraints we do not control, there is always ground we can win through ingenuity, discipline, and a refusal to settle.

This is the mindset I would urge across our entire sector. To my fellow operators, generators, distributors, and investors alike, I say this: we cannot wait for every external constraint to be resolved before we improve what is within our reach. Embrace technology. Invest in your people. Pursue efficiency relentlessly. The companies that thrive in the years ahead will be those that treat innovation not as a luxury but as an existential necessity.

A Philosophy of Building, Not Extracting

This conviction did not emerge in a vacuum. It is rooted in the vision of our Group Chairman, Tony O. Elumelu, and in the philosophy of Africapitalism he has championed: the belief that the private sector has both the power and the responsibility to drive long-term investment that creates economic prosperity and social wealth.

At Transcorp Power, Africapitalism is not a slogan; it is how we run a plant. Every megawatt we add, every hour of downtime we eliminate, every naira we invest in capacity is, ultimately, a school that can stay open and empower the leaders of tomorrow, a hospital that can keep its lights on, a small business that can grow.

Under Mr Elumelu’s leadership, Transcorp grew its output dramatically after privatisation and built one of the country’s most significant generation portfolios, contributing a meaningful share of Nigeria’s installed capacity. That is the practical face of an idea: capital deployed not to extract value from Africa, but to build it.

The Road Ahead

Our team is made up of professionals who have chosen the harder path of doing this work well, in real conditions, for a country we believe in. We do not pretend the challenges are small. But I am convinced that Nigeria’s power story is turning, and that the next chapter will be written by those who pair sound policy with relentless execution.

Government has begun to clear the path. Now industry must run on it. The light Nigerians deserve will not be switched on by any single act or actor. It will be earned, plant by plant, reform by reform, innovation by innovation, by people who refuse to accept darkness as our destiny. We are ready to do our part; other key stakeholders should join in.

Engr. Ikenga writes from Ughelli, Delta State. He is the MD/CEO of Transcorp Power Plc