Most states lack capacity to build power infrastructure – Adesina

The Group Managing Director of Sahara Power Group, Kola Adesina, has expressed concern over the ongoing transfer of regulatory powers in the electricity sector to state governments, warning that most states lack the financial and technical capacity to develop the required infrastructure.

Speaking on Thursday at the 20th anniversary celebration of the Nigerian Electricity Regulatory Commission (NERC) in Abuja, Adesina said several provisions in the 2023 Electricity Act needed urgent review to strengthen the power sector and attract sustainable investment.

“Today, the Electricity Act has elements that need to be remedied very quickly. The states don’t possess the wherewithal to build electricity infrastructure. Let’s call a spade a spade—they don’t have the resources,” Adesina said. “When you are breaking down inefficiency into another level of inefficiency, you are only spreading the virus. The best approach is to ensure alignment across all levels so that investments can flow easily.”

The Electricity Act 2023 decentralised the regulation of electricity generation, transmission, and distribution, allowing states to establish their own regulatory frameworks. According to NERC, 15 states have obtained Transfer Orders, with 11 completing the six-month transition period, although only eight are currently operational.

Adesina further argued that the current investment model in Nigeria’s electricity sector is unattractive to investors due to its consumption pattern, which is dominated by residential rather than industrial users. He noted that this imbalance contributes to high electricity tariffs, compounded by widespread energy theft and poor payment compliance.

“In countries where there is stable power supply, about 80 percent of electricity consumption is industrial and commercial, while only 20 percent is residential,” he explained. “In Nigeria, the reverse is the case. The fewer the industrial consumers, the higher the tariffs. Many residential consumers don’t pay for power—they steal it. That’s another challenge we must confront.”

Adesina echoed concerns recently raised by the Minister of Power, Adebayo Adelabu, that over 60 percent of Nigeria’s manufacturing sector currently operates off-grid. He called for stronger government policies to attract industries to the national grid, noting that a broader industrial base would help reduce electricity costs.

“What guarantees are we putting in place to bring large-scale energy consumers into Nigeria, alongside power plants?” he asked. “The more power becomes available and accessible, the cheaper the tariffs will be.”

Reflecting on the sector’s performance more than a decade after privatisation, Adesina lamented that electricity generation and infrastructure have not kept pace with population growth or national demand.

“Twelve years after privatisation, we are still struggling. Despite an increase in population, electricity supply and infrastructure have remained below expectations,” he said.

He concluded by stressing the importance of policy consistency and leadership commitment to drive investor confidence.

“There must be stability in the system,” Adesina said. “We must see genuine commitment from leadership to resolve the sector’s challenges. Only then will investors, including us, have the confidence to invest further.”