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Unused and Unpaid: How Nigeria’s Electricity System Undercuts Its Economy

Unused and Unpaid: How Nigeria’s Electricity System Undercuts Its Economy
Friday, 01 August 2025 08:12
  •  NDPHC aims to commercialize 200 MW from idle plants, pending regulator approval.
  • Nigeria generates only 4,000-6,000 MW despite 14,000 MW installed capacity.
  • Poor coordination and delays block power sales, straining producers like NDPHC.

Nigerian power company Niger Delta Power Holding Company (NDPHC) plans to commercialize 200 megawatts (MW) of its unused electricity capacity. The company holds 2,000 MW of capacity in total, but this electricity remains off-grid due to a lack of approved commercial agreements. This inability to monetize its assets is a financial strain, as the company collects only about 30% of its receivables.

According to press reports published Monday, July 21, the 200 MW in question are primarily from the Omotosho and Alaoji thermal power plants. NDPHC has signed multiple Power Purchase Agreements (PPAs) with private buyers, but these contracts still require approval from the Nigerian Electricity Regulatory Commission (NERC).

While a recent reform of the Electricity Act allows NDPHC to contract directly with creditworthy clients and bypass the regulated market, these new powers have faced administrative delays and a lack of coordination among sector players.

The NDPHC situation highlights a structural imbalance in Nigeria’s power system. According to the Nigeria System Operator and NERC, the country has an installed capacity of approximately 14,000 MW, but only 4,000 to 6,000 MW are actually generated. The discrepancy points to breakdowns in the chain from generation to transmission and distribution.

Theoretical demand for electricity is estimated at 30,000 MW, based on scenarios from the Nigerian Energy Transition Plan (ETP) and the Federal Ministry of Power's long-term goals. The grid also suffers from technical and commercial losses exceeding 50%, and distribution companies struggle to meet their payment obligations.

Beyond NDPHC, other public and private producers also have difficulty monetizing some of their output due to a lack of contractual outlets, which directly impacts their revenues.

The 200 MW from NDPHC will remain unused until the regulator approves the power purchase agreements. A 2024 report by PwC Nigeria states that the success of the Electricity Act depends on the authorities' ability to implement these agreements.

Studies by the Oxford Institute for Energy Studies indicate that without better coordination between producers, the transmission network, and distributors, generation investments risk remaining underutilized over the long term.

Abdel-Latif Boureima

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