Revisiting Nigeria’s power sector privatisation

Nigeria’s power sector privatization has been a topic of debate and concern for many years, with calls for reform continuing to grow. The Minister of Power has made it very clear that there is no turning back on the privatization of the sector, despite ongoing challenges. In a recent interview on CNBC Africa, Sam Amadi, Director at the Center for Public Policy and Research, shared insights on the current state of the power sector and the need for addressing growing concerns. The privatization of the power sector in Nigeria took place around eight to nine years ago, back in 2013. However, since then, various issues have emerged, including grid collapses, debt within distribution companies (discos), generation capacity challenges, and the struggle to implement cost-reflective tariffs. Amidst these challenges, the Minister of Power remains steadfast in his support for the privatization of the sector, despite criticism from electricity workers who advocate for a reversal of the process. Sam Amadi emphasized the importance of evaluating the privatization process, noting that while it was intended to address the inefficiencies of the public sector, the results have fallen short of expectations. Amadi highlighted the need for a more pragmatic approach, focusing on complementary reforms and corporate governance. He pointed out that the rushed timeline for privatization did not allow for the establishment of proper corporate governance structures, leading to ongoing challenges in the sector. Amadi also stressed the importance of building investor confidence and credibility in the power sector, suggesting that market-based benchmarks and transparent decision-making processes are essential for attracting investments. He noted that institutional players are hesitant to invest in the sector due to a lack of trust in the government's ability to create a stable and credible environment for investment. Looking ahead, Amadi proposed conducting market-based assessments to evaluate the performance of current owners and explore opportunities to bring in new investors who can meet the sector's demands. He underscored the need for short-term fixes to address immediate challenges and ensure the sector continues to function efficiently. In conclusion, while the road ahead for Nigeria’s power sector privatization may be complex, stakeholders like Sam Amadi are advocating for strategic reforms and improved governance to address the sector’s pressing concerns. As the debate on the future of the power sector continues, it remains clear that a collaborative effort involving government, regulators, investors, and other key stakeholders will be essential to drive sustainable progress and ensure a reliable power supply for Nigeria's citizens.