By Sonny Iroche
In 2013, Nigeria embarked on one of the most ambitious privatization exercises in its history, the unbundling and sale of its electricity generation and distribution assets. Eleven Distribution Companies (DisCos) and six Generation Companies (GenCos) were carved out of the defunct Power Holding Company of Nigeria (PHCN), while the Transmission Company of Nigeria (TCN) was retained under government ownership.
At the time, I wrote an article recommending that the newly privatized companies must immediately infuse substantial capital into their operations. I cautioned that most of the investors were acquiring these assets through heavily leveraged financing, borrowing as much as 80% of the acquisition cost at exorbitant interest rates. I warned that without equity injections, strategic investment in technology, and genuine reform of governance structures, the privatization exercise could eventually lead to another systemic collapse.
A decade later, those words have proven almost prophetic.
The Burden of Debt and the Mirage of Privatization
The intent of privatization by the Goodluck Jonathan administration was noble, to bring efficiency, transparency, and private sector discipline into the Nigerian Electricity Supply Industry (NESI). However, the structure was flawed from inception. Most of the new owners lacked both the technical expertise and the financial capacity required to turn around complex electricity assets, which had never been done in the country’s history. The acquisition model was driven mainly by debt, not equity; by political access, not operational competence.
The result was predictable. From 2013 to date, the sector has remained trapped in chronic liquidity crises. The DisCos struggle to collect revenue from consumers due to obsolete metering and poor infrastructure. The GenCos, in turn, are unable to receive full payments for energy produced, while gas suppliers remain unpaid. The Transmission Company, sometimes wrongly labeled as the weakest link, remains under government control and severely underinvested.
The entire value chain is, therefore, perpetually indebted, a vicious cycle of cash shortfalls, energy losses, and technical inefficiency. According to data from the Nigerian Electricity Regulatory Commission (NERC), aggregate technical, commercial, and collection (ATC&C) losses still hover between 25% and 30% in many DisCos.
This means that nearly half of the power generated is either lost through inefficiencies or unbilled. No sustainable market can survive under such conditions.
A Decade of Missed Opportunities
Privatization was meant to be a catalyst for industrialization, job creation, and improved living standards. Instead, Nigeria’s average available generation has stagnated between 4,500 and 6,000 megawatts, a slight improvement post privatization, for a population now exceeding 220 million people. South Africa, with barely a third of Nigeria’s population, still generates over 40,000 MW even amidst its own power challenges, of Load Shedding.
Investors who expected quick profits discovered that the power business requires patient capital, deep technical know-how, and sound regulation. Instead of reinvesting earnings into network expansion, most resorted to cutting costs, downsizing, and lobbying for tariff increases.
The government, unwilling to allow tariffs to reflect real market costs, resorted to subsidies and intervention funds, from the Central Bank’s N213 billion facility to the N701 billion payment assurance guarantee and others. These lifelines postponed insolvency but never solved the underlying structural weaknesses.
Today, nearly all DisCos are technically insolvent. Several have been taken over by banks or the Asset Management Corporation of Nigeria (AMCON). The GenCos are suffocating under mounting debt owed by the Nigerian Bulk Electricity Trading Plc (NBET).
Ten years after privatization, the Nigerian electricity market remains neither truly private nor truly efficient, a classic case of reform without transformation.
The Broader Lesson: Technology and Vision Deficit
Today, I wish to draw a sobering parallel between Nigeria’s power-sector malaise and our current indifference toward Artificial Intelligence (AI) and emerging technologies. The same short-sightedness that characterized the power privatization era is manifesting again, this time in our approach to the Fourth Industrial Revolution.
Today, AI is redefining global productivity, reshaping industries, and rewriting the social contract between citizens and the state. Conservative estimates project that AI could add between $15 trillion and $20 trillion to global GDP by 2030. Yet, Nigeria is still debating basic digital infrastructure, literacy, and connectivity.
Instead of encouraging Public-Private Partnerships (PPP) to build AI-ready data centers, fiber optic backbones, and smart energy grids, we are pouring billions into coastal roads and politically convenient projects that have little multiplier effect on national productivity.
While China and South Korea are experimenting with flying driverless vehicles, Nigeria is still struggling to fix pothole-ridden roads and provide stable electricity, that have been left unattended for decades. Our priorities have for long been tragically misplaced.
Leadership, Literacy, and the Knowledge Gap
Our tragedy is not the lack of resources but the long years absence of visionary leadership. We have had leaders and citizens preoccupied with the rent economy, subsidies, investing outside the shores of the country in everything from education to real estate, from healthcare to hospitality. The elite class consumes foreign progress but rarely invests in domestic innovation.
Worse still, the electorate, some uneducated or economically disenfranchised, cannot meaningfully evaluate leaders on their technological vision or policy depth. In a democracy where votes are swayed by ethnicity, vote buying, voter’s apathy, and patronage, not performance or foresight, mediocrity perpetuates itself , across the board in leadership selection.
We have now become a nation addicted to lamentation, always reacting after the damage has been done. In 2013, I warned that the DisCos and GenCos must recapitalize. Today, we are repeating the same mistake with AI and digital transformation. Unless we act, in another ten years we will again be asking: “Why were we left behind?”
The Way Forward: From Power to Empowerment
Yet, I remain very optimistic about the future of our country, Nigeria and Africa, with their youthful populations of 70% under 30 years, possess a demographic advantage in this emerging Fourth Industrial Revolution. What we lack in infrastructure, we can compensate for with intellectual, resourceful and creative energy.
To unlock this potential, we must take deliberate steps:
1. Reform the Electricity Market, Again Properly: Allow market-reflective tariffs, enforce corporate governance, attract real investors with capital and expertise, and reduce political interference.
2. Invest in Energy Technology: Adopt smart meters, blockchain for billing, and AI-driven grid management systems that predict faults and optimize load distribution.
3. Create PPPs for Data Infrastructure: Encourage local and foreign partnerships to establish Tier-3 and Tier-4 data centers, the foundation of the AI economy.
4. Integrate AI into Education: From secondary schools to universities, AI and digital literacy must become core subjects. This is how China, India, and Singapore built their competitive edge.
5. Incentivize Innovation and Research: Fund start-ups and incubators focused on AI applications in energy, agriculture, and governance.
The Urgency of Now
The story of Nigeria’s electricity privatization is not merely about failed investors or weak regulators; it is a reflection of a deeper national pattern; a pattern of waiting too long to act, of ignoring expertise until crisis compels attention.
The same future blindness that crippled our power sector is creeping into our digital and AI landscape. Ten years from now, when the world is fully AI-driven, we risk once again being spectators, lamenting missed opportunities.
We need bold, visionary, and informed leadership, not politicians chasing contracts or slogans. Nigeria’s future is not in oil, nor in subsidies, nor in roads that lead nowhere, but in data, digital infrastructure, and human capital.
The Fourth Industrial Revolution has no sympathy for laggards. We either innovate, or evaporate.
Note: Sonny Iroche was an Executive Director (F&A), Transmission Company of Nigeria 2013-2017. He is currently the Chairman of GenAI Learning Concepts Ltd, a Member of Nigeria’s National AI Strategy Committee, the UNESCO Technical Working Group on AI Readiness Assessment, and a Postgraduate Scholar of Artificial Intelligence for Business at the Saïd Business School, University of Oxford.
LinkedIn: https://www.linkedin.com/in/sonnyiroche
