Beyond Reform Announcements: The Role of Institutional Credibility in the Viability of the Nigerian Electricity Sector

Abstract

Over three decades of electricity sector reform, spanning liberalisation, unbundling, privatisation and the enactment of two reform Acts in 2005 and 2023, have not delivered a functional, technically reliable and financially credible electricity system for the country. In 2024, Nigeria generated an average of approximately 4,223 MW from over 13,625MW of installed capacity, a utilisation rate of barely 31 percent. This article argues that the persistent failure is institutional rather than legislative. Nigeria has enacted the laws, but has not enabled the governance conditions and executive capacity that make these laws work. Privatisation transferred ownership without establishing cost-reflective tariffs, metering infrastructure, fuel supply security, or credible payment and settlement mechanisms. The Electricity Act 2023, while architecturally innovative in devolving responsibility to States, risks embedding the same sequencing error at
sub-national level unless foundational governance deficits are also addressed. Drawing on Nigerian performance data and evidence from India, the article makes the case for a different reform logic: one that prioritises institutional credibility over structural reorganisation and builds the conditions for technical reliability and commercial viability from the ground up.