The Nigerian electricity market recorded a sharp revenue increase of N700 billion in 2024, representing a 70 percent rise in collections over the previous year, according to the Minister of Power, Adebayo Adelabu.
Adelabu, who spoke during the sixth edition of the 2025 Ministerial Press Briefing Series in Abuja, said the increase was largely driven by the implementation of cost-reflective tariffs for Band A customers—those promised at least 20 hours of power supply daily.
“It is evident that, due to our transformative tariff reforms, the electricity market generated additional N700 billion revenue in 2024, reflecting a 70 per cent increase from what was collected in 2023,” Adelabu said.
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He stressed that the growth in revenue had helped reduce the government’s subsidy burden, which dropped from N3 trillion to N1.9 trillion—marking a 35 percent reduction in the fiscal shortfall.
However, despite the revenue growth, which the federal government has described as unprecedented, Nigerians across many parts of the country say the power supply remains largely unstable, casting doubt on the practical gains of the touted reforms.
The experience for many consumers contradicts the federal government’s portrayal of success. Many Nigerians, including those categorized under Band A, say they are not receiving the promised 20-hour daily supply, despite being charged higher rates. The mismatch between revenue growth and actual service delivery has raised concerns among energy analysts and civil society groups.
Using Revenue Growth as a Selling Point to Investors
For the federal government, however, the N700 billion surge is being positioned as a major selling point to attract private capital into Nigeria’s underperforming power sector.
Adelabu indicated that the increase in market liquidity signals improved viability of the power sector, which has long been considered financially toxic due to legacy debts, poor cost recovery, and regulatory inconsistencies. According to him, the performance demonstrates that financial viability and improved service delivery can coexist within Nigeria’s electricity value chain if appropriate reforms are sustained.
The federal government has earlier noted that the increased revenue collections are key to restoring investor confidence, especially in the aftermath of failed privatization efforts that saw generation and distribution companies remain largely inefficient over a decade after unbundling.
According to the minister, the government’s long-term strategy involves creating a stable, rules-based environment that can attract foreign direct investment and stimulate local private sector participation.
Powering Africa: Nigeria’s Role in the Energy Compact
In addition to local reforms, Adelabu reiterated Nigeria’s commitment to energy access across the continent. He referenced the country’s endorsement of the Nigerian Energy Compact earlier this year, which forms part of a continent-wide initiative known as “Mission 300,” aimed at connecting 300 million Africans to electricity by 2030.
The Compact, signed in January during a summit in Tanzania, is anchored on a five-pronged strategy: expanding generation capacity, strengthening utility operations, encouraging private sector investment, accelerating renewable adoption, and integrating regional energy markets.
It also promotes clean cooking solutions, which remain critical for Nigeria where over 70 percent of households still rely on biomass or kerosene for cooking.
Adelabu noted that the Compact, supported by both the World Bank and the African Development Bank, is a central pillar in Nigeria’s broader power sector vision. In January 2025, both institutions pledged a combined $40 billion to fund the initiative across the continent.
The Minister also confirmed that the National Integrated Electricity Policy (NIEP), developed under the Electricity Act of 2023, has been submitted to the Federal Executive Council for approval. The policy is expected to serve as the blueprint for a modern, decentralized electricity system in Nigeria, providing guidance for both private and public actors.
Built on data-driven planning and performance-based regulations, the NIEP seeks to eliminate investor uncertainty and foster competition across the value chain. Adelabu said it will also align with the provisions of the Electricity Act, which devolved the management of electricity to sub-national governments.
But the success of the policy, like the broader reforms, will depend on whether consumers begin to feel the impact in their daily lives.
Trust Gap and Supply Woes
Across Nigeria, the impact of power outages continues to be felt across businesses, hospitals, and households. Small businesses, especially those outside Band A areas, say they continue to bear the cost of running on generators, even as electricity bills rise without corresponding improvements in supply.
The lack of investment in transmission infrastructure has also become a bottleneck, with power generated frequently stranded due to poor evacuation capacity. The country’s current transmission network, although improved slightly in recent years, still lacks the capacity to deliver consistent supply across the country, particularly in underserved northern and southeastern regions.
According to grid data, the system collapses and under-frequency load shedding persisted throughout 2024, while generation fluctuated below 4,500 MW for much of the year—far below national demand.
A Market Still in Transition
While the increase in revenue suggests the government is beginning to close the gap between tariffs and the actual cost of electricity, the power sector remains fragile and dependent on state intervention. Many of the electricity distribution companies (DisCos) are technically insolvent, with several under management by banks and government agencies.
The Transmission Company of Nigeria (TCN), still fully owned and operated by the federal government, continues to face capacity and funding challenges. Energy experts have noted that the lack of coordination between generation, transmission, and distribution remains a recurring obstacle to meaningful progress.
While Adelabu’s remarks may reflect a sector in transition, Nigerians, still in the dark, are less interested in revenue milestones and more in seeing consistent, affordable, and reliable electricity in their homes and businesses.