More than a decade after the privatisation of Nigeria’s electricity generation and distribution sectors, the promise that private capital would deliver reliable and affordable power has collapsed under the weight of lived reality. The unbundling of the defunct Power Holding Company of Nigeria (PHCN) into GenCos and DisCos was sold to us by the government as a technocratic solution to inefficiency in the sector. In practice, it has produced job losses, chronic underinvestment, tariff hikes, and deepening inequality in access to electricity.
Nigeria today remains one of the countries with the largest electricity access deficit in the world. Tens of millions of people have no connection to the grid at all, while many of those officially connected receive only a few hours of supply per day. Businesses and households rely on petrol and diesel generators as a parallel energy system, paying some of the highest self-generation costs in the world. This is not the outcome of a functioning power sector, it is the outcome of a failed policy model.
Privatisation, Mass Retrenchment and Unending Grid Collapse
The PHCN privatisation in 2013 resulted in the sacking of thousands of skilled electricity sector workers. This was supposed to enable greater efficiency. But this wave of retrenchment was also a direct attack on the technical capacity required to run a complex national grid.
Electric power systems require institutional memory, maintenance culture, and long-term planning. By dismantling the needed workforce for what is in essence a public service and replacing it with leaner, profit-driven structures, the privatisation exercise further weakened the operational resilience of an already badly mismanaged sector. The frequent grid collapses that we now experience are not accidental they are the direct outcome of a system stripped of both human and material resources.
Transmission remains under federal control, yet the state has failed to undertake the scale of expansion required. Even when generation capacity is available, the grid often cannot evacuate power generated, for distribution. A country of over 230 million people operates a grid that is incapable of delivering stable supply for even half that population. The bottleneck between generation and distribution means that capacity is stranded while the people who have now been reduced to consumers sit in darkness.
Rent-Seeking Without Investment
A major rationale behind privatisation was that the GenCos and DisCos that acquired public assets were expected to inject fresh capital into rehabilitation and expansion. Instead, the dominant pattern has been financial engineering rather than infrastructure development. Distribution networks remain dilapidated, metering gaps persist, and technical losses are high.
Rather than invest upfront capital, capitalist operators have focused on tariff increases as their primary route to profitability. “Cost-reflective” tariffs have been repeatedly approved. But supply has not improved proportionately. Consumers are paying more for even worse service as communities are often responsible for installation and maintenance of consumer-end distribution infrastructure such as step-down transformers and electric poles.
This is classic rent-seeking behaviour, extracting profits from existing assets without expanding productive capacity. The socialisation of risk and privatization of profit has defined the sector. Public funds bailed out market participants, while working people bear the burden of higher tariffs.
Energy Poverty and Class Inequality
The result is an increasingly stratified energy system. While more than one-third of Nigerians don’t have access to grid electricity at all, affluent neighbourhoods on higher tariffs bands are supplied more hours for electricity. Wealthy households and corporate estates can afford generators, inverters, and now private mini-grids while the working class and rural poor remain trapped in energy poverty.
Electricity is not simply a commodity; it is a social necessity that underpins education, healthcare, and industrial development. When access is determined by purchasing power rather than social need, inequality becomes embedded in the infrastructure of delivery.
The Electricity Act 2023 further entrenched this trend by decentralizing power generation and distribution to states and private developers. In theory, this could encourage local solutions. In practice, it’s the federal government shirking responsibility and supporting the creation of energy enclaves for the affluent.
Mini-grids and embedded generation projects are financially viable primarily in high-income areas where consumers can pay expensive tariffs. Working-class and rural communities, which need grid electrification most, are unattractive to private investors. Without massive public subsidies, they remain excluded.
Decentralisation under a market logic does not produce universal access, it produces islands of regular electricity supply in a sea of darkness.
Misplaced Infrastructure Priorities
While the transmission grid remains under-funded, the Bola Tinubu-led APC federal government has prioritised high-cost megaprojects such as the Lagos-Calabar coastal highway. The per-kilometre cost of this project is excessive and arrived at in a non-transparent manner.
Infrastructure choices reflect political priorities. Electricity has the highest multiplier effect across the economy: it lowers logistics costs, enables manufacturing, and improves the delivery of public services. Yet power sector investment has lagged while public funding is directed toward inflated white elephant projects.
Neoliberalism and the Myth of the Power Market
The underlying ideology of the reform is neoliberalism, the proposition that private ownership, market pricing, and deregulation will automatically deliver efficiency. What it delivers instead is efficiency in profit extraction for the bosses. Universal electrification requires the pivotal place of public financing and planning of grid expansion. Public utilities must absorb the initial costs and cross-subsidise rural and working-class consumers.
A coordinated, federally led expansion of generation and transmission would exploit economies of scale and reduce unit costs. Nigeria’s high logistics costs already make decentralised, fragmented systems more expensive per kilowatt-hour. However, such an approach would require mobilising labour, domestic industry, and public finance on a scale comparable to historical electrification drives elsewhere, but our current crop of capitalist elites would rather leave this to the logic of profitability.
Toward a Socialist Alternative
The failure of privatisation generally lays bare the fundamental realities about ownership, planning, and social priorities under capitalism, where profit always comes first before the mass of the people. In Nigeria, where a neocolonial state is pushing the neoliberal project of 21st-century capitalism, the situation is even worse. neo-colonial and neoliberal state. A socialist approach would treat electricity as a public good rather than a centre for profit extraction. This is fully achievable only in a socialist system, where workers democratically wield the political an economic control needed to shape how society is run.
Thus, while we must fight to roll back the privatisation of the electricity sector in Nigeria and to win better access to affordable electricity supply for the working people, we must not lose sight of the systemic nature of the problem and fight to change it.
by Emmanuel EDOMWONYI
