NSE Reports Minimal Progress in Power Sector Despite Ongoing Reforms

The Nigerian Stock Exchange (NSE) has raised concerns over the slow pace of progress in the nation’s power sector despite years of policy reforms, privatization efforts, and substantial public and private sector investments. In its latest sectoral performance review, the NSE noted that the electricity industry continues to underperform in generation, transmission, and distribution, posing significant challenges to economic growth and industrial development.

According to the report, while the government has implemented multiple reform programs—including the Power Sector Recovery Programme (PSRP) and the Electricity Act of 2023—the impact on supply reliability and efficiency remains marginal. The exchange observed that electricity generation still fluctuates between 3,000 and 4,500 megawatts daily, far below the estimated national demand of over 20,000 megawatts. This persistent supply gap continues to undermine business productivity and discourage new investments in the manufacturing and service sectors.

The NSE report emphasized that weak infrastructure, liquidity constraints, and regulatory inconsistencies have hindered the sector’s expected transformation. It noted that several distribution companies (DisCos) and generation companies (GenCos) remain financially distressed, struggling to meet obligations to market operators and gas suppliers due to inadequate cost-reflective tariffs and high technical losses.

The Exchange also highlighted that the performance of listed energy companies has been affected by the challenges in the broader power sector. According to its analysis, most publicly quoted firms in the electricity value chain continue to face revenue shortfalls and operational inefficiencies, which have dampened investor confidence. The NSE stated that unless significant progress is made in policy enforcement and infrastructure upgrade, the sector will remain unattractive to private investors seeking stable returns.

A senior market analyst at the NSE, Mr. Kehinde Adesina, explained that the lack of measurable improvements in electricity supply is contributing to Nigeria’s economic stagnation. “Power remains the backbone of any modern economy, and the Nigerian situation continues to be a bottleneck for growth. Despite reforms, we are still battling with low generation output, weak transmission capacity, and inefficient distribution networks,” Adesina said.

He further noted that Nigeria’s power sector requires massive capital infusion, transparency, and stricter enforcement of regulatory standards to achieve sustainable progress. “Investors are watching, but they are reluctant to commit because the returns are uncertain and the regulatory risks are still high. Without clear incentives and improved governance, reforms will only exist on paper,” he added.

The NSE report also draws attention to the worsening liquidity issues within the electricity market. It revealed that the sector is burdened by a liquidity gap estimated at over N2 trillion, largely due to tariff shortfalls, energy theft, and non-payment by government agencies. This financial imbalance, the report said, continues to limit investment in critical infrastructure, thereby preventing the sector from expanding its generation and distribution capacity.

Industry operators share similar sentiments. The Association of Nigerian Electricity Distributors (ANED) recently stated that most DisCos are unable to recover their operating costs due to low tariffs and non-cost-reflective pricing structures. ANED’s Executive Director, Mr. Sunday Oduntan, noted that although reforms such as the metering program and the service-reflective tariff regime have improved billing accuracy, the financial sustainability of DisCos remains fragile.

He added that the transmission network, managed by the Transmission Company of Nigeria (TCN), continues to be a major bottleneck, often unable to wheel the generated power efficiently due to aging infrastructure and inadequate capacity. As a result, frequent system collapses persist, leading to nationwide blackouts and interruptions that cripple business operations.

Meanwhile, energy experts have suggested that the government must prioritize off-grid and renewable energy solutions to bridge the supply gap. According to Dr. Halima Odu, an energy economist, Nigeria cannot rely solely on grid expansion to solve its electricity challenges. “The time has come to diversify power generation sources through investments in solar, wind, and mini-grid systems. These decentralized solutions can provide reliable electricity to rural communities while reducing the strain on the national grid,” she said.

The Electricity Act 2023, which allows states to generate and regulate power independently, has been described as a potential game-changer if implemented effectively. Several states, including Lagos, Edo, and Kaduna, have already begun developing independent electricity markets to attract private investors and ensure localized power generation. However, the NSE report warns that without proper coordination between federal and state regulators, overlapping jurisdictions could create new governance challenges.

In addition, the report underscored the role of foreign exchange volatility and inflation in worsening operational costs for electricity firms. Many companies in the sector depend on imported equipment and spare parts, and the naira’s persistent weakness has led to higher maintenance costs and delayed project completion.

The NSE also called for improved collaboration between financial institutions and power operators to unlock funding for infrastructure projects. It urged the CBN and development finance institutions to design targeted credit programs and risk-sharing mechanisms to encourage private investment in renewable and transmission projects.

Despite these challenges, the Exchange acknowledged ongoing efforts by the federal government to stabilize the sector. The introduction of new regulatory frameworks, metering initiatives, and renewed attention to energy transition are viewed as positive signals. However, the NSE maintained that visible progress remains slow and inconsistent, with power supply still failing to meet the needs of households and industries across the country.

As Nigeria continues its push for industrialization, experts warn that meaningful progress in the power sector will determine the nation’s long-term economic competitiveness. Unless the current structural inefficiencies are addressed, the gap between energy demand and supply could widen further, eroding the benefits of ongoing reforms and weakening investor confidence in one of the economy’s most critical sectors.

 

Ultimately, the NSE concluded that while reforms have set the foundation for progress, actual implementation and accountability will determine whether Nigeria can achieve reliable, affordable, and sustainable electricity supply in the near future.