Nnaji blames broken tariff promise for Nigeria's power privatisation failure
- Former power minister Barth Nnaji says DisCos were promised cost-reflective tariffs before the 2013 privatisation but never got them.
- He says the sector now owes Gencos over ₦7 trillion and no new grid power plant has been built since 2015.
- Manufacturers reportedly spent about ₦1.35 trillion on alternative power in 2025, according to one speaker at the Lagos forum.
Thirteen years after Nigeria sold off its state-run electricity assets, a former Minister of Power has given his account of why the lights are still unreliable: government did not keep its promise on tariffs.
Prof. Barth Nnaji, now chairman of Geometric Power, spoke on Friday evening at the Lagos Country Club Business Forum, held under the theme "Energy Costs and Business Survival". He said investors put money into the Distribution Companies (DisCos) in the 2012/2013 privatisation on the understanding that tariffs would reflect the true cost of supplying electricity.
That did not happen, he said, and the DisCos have struggled ever since.
What Nnaji said went wrong
Nnaji recalled that before June 2012, electricity sold for ₦6 per kilowatt-hour. He said his team raised it to ₦22 for those who could afford it, while the urban poor and rural dwellers were moved from ₦6 to ₦4.
He said he had told then President Goodluck Jonathan that no investor would come unless tariffs reflected cost. Even after the increase, he argued, the tariffs still fell short of cost.
He listed other problems: irregularities in how the privatisation was handled, and investors chasing quick, large profits in a business that takes seven to 10 years to pay back. He said the way the exercise was conducted also put Nigerian banks at risk.
"If not for the Federal Government's intervention through subsidies, the power sector loans, which now amount to more than ₦7 trillion... the major banks that participated in the privatisation might have gone under," he said, citing a figure from the Association of Power Generation Companies of Nigeria.
Nnaji put the cost of a subsidy in plain terms: ₦50 per kilowatt-hour on 5,000 megawatts comes to about ₦180 billion a month, or ₦2.16 trillion a year.
He also said the suspension of the partial risk guarantee in 2015 scared off investors, and that no new power plant has been added to the national grid since then apart from his own Aba project. He said ExxonMobil and Century Power each planned 500 megawatts but shelved the plans for lack of the guarantee.
He said it costs more than $1.5 million to install one megawatt of plant, and that Aba Power spent about ₦50 billion to give over 96 per cent of its customers smart meters.
Why it matters for ordinary Nigerians
The forum heard that manufacturers spent about ₦1.35 trillion on alternative power sources in 2025, according to Mrs Ifeoma Ukabiala of JDR Energy Ltd. Businesses switch to diesel whenever the grid fails, and those costs feed into the prices Nigerians pay for goods.
Ukabiala also noted that despite proven gas reserves of about 215 trillion cubic feet as of January 2026, many Nigerians still cook with firewood.
The immediate past president of the Manufacturers Association of Nigeria, Mr Seyi Adewunmi, said the theme was timely, describing grid failures, rising fuel prices and higher operating costs as a critical crossroads for the economy.
Nnaji's position is that government must either approve tariffs that reflect cost or budget openly for subsidies — and that the sector needs patient capital, not quick returns.
