The Federal Government of Nigeria has finalized the sale of five power plants under the National Integrated Power Projects (NIPPs) for approximately $1.15 billion.
This was disclosed by the Minister of Power, Adebayo Adelabu, at the BusinessDay “Powering Nigeria’s Energy Future: Addressing Infrastructural Challenges for Sustainable Energy Development” Conference held in Lagos.
The bidding process for the power plants has been completed, and a final report has been submitted to the National Council of Privatization (NCP), chaired by Vice President Kashim Shettima. The plants sold include the Omotosho and Olorunsogo plants, which fetched about $85 million and $170 million, respectively.
Tekedia Mini-MBA edition 16 (Feb 10 – May 3, 2025) opens registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
Adelabu confirmed, “The sale of these power plants marks a significant step in our efforts to improve the power sector. The funds generated will be used to support national economic objectives.”
The decision to sell these power plants came after prolonged disputes and legal battles. In December 2022, the federal government and the 36 state governors agreed to sell the NIPPs to fund the 2023 budget. This agreement followed over two years of negotiations and opposition from various groups.
Former Director-General of the Bureau of Public Enterprises (BPE), Alex Okoh, previously disclosed that an agreement had been reached between the Federal Government and the states regarding the sale of the NIPPs. However, the announcement faced opposition from various stakeholders.
Discussions about the sale of the NIPPs have been ongoing for years, with significant milestones reached in April 2021 when the National Council on Privatization approved the fast-track sale of five NIPPs. In March 2022, the Nigerian National Petroleum Corporation (NNPC) showed interest in acquiring some of these power plants.
Nigeria’s Struggle for Steady Power Supply
Nigeria’s journey towards a steady power supply has been fraught with challenges. Despite being one of the largest economies in Africa, the country has struggled with chronic power shortages and frequent blackouts, which have significantly hindered economic growth and development.
The national grid, generating less than 5,000 MW, has often been unable to meet the demand, resulting in frequent outages. The lack of reliable power has forced many businesses and households to rely on expensive and polluting diesel generators, adding to operational costs and environmental issues.
Efforts to reform the power sector have included attempts to improve generation capacity, modernize infrastructure, and enhance distribution efficiency. However, these efforts have often been hampered by inadequate investment, corruption, and bureaucratic inefficiencies.
To address these issues, the Nigerian government has embarked on a comprehensive strategy to revitalize the power sector through privatization. The sale of the five NIPP plants is a crucial part of this strategy. By transferring ownership to private entities, the government aims to attract more investment, improve management efficiency, and ultimately provide more reliable power to consumers.
The privatization process is expected to bring in much-needed capital for upgrading infrastructure, expanding capacity, and deploying advanced technologies. It is also anticipated that private operators will implement better governance practices, reducing inefficiencies and losses that have plagued the sector.
The privatization plan is the major reason the government recently increased tariffs for Band A electricity customers.
The Nigerian Electricity Regulatory Commission (NERC) has approved a significant increase in electricity tariffs, from N66/N77 per kilowatt-hour to N225 starting in April. This adjustment aims to reduce electricity subsidies by about N1.14 trillion in 2024. Initially, the federal government had estimated that N1.6 trillion would be spent on electricity subsidies in the 2024 fiscal year.
Metering Initiative
In addition to the power plant sales, Adelabu highlighted the government’s efforts to improve metering for electricity customers. He announced an N20 billion fund for the procurement of meters for unmetered Band A electricity customers, who receive 20-24 hours of electricity supply daily. The goal is to complete this full-scale metering by the end of September.
“We are releasing N20 billion for the electricity distribution companies to procure meters for the unmetered Band A customers before the end of September,” Adelabu stated.
The Nigerian Electricity Regulatory Commission (NERC) reported that over seven million electricity customers in Nigeria remain unmetered. The government aims to inject 1.5 million meters into the power sector through the World Bank Distribution Support Recovery Program and ensure an additional two million meters annually for the next five years through the Presidential Metering Initiative. The World Bank has released a $500 million loan to the government for the project.