Dr. Joy Ogaji stands as one of the most authoritative voices in Nigeria’s power sector, in a nation where electricity remains both an essential necessity and a persistent challenge. As Chief Executive Officer of the Association of Power Generation Companies (APGC), she operates at the intersection of policy, investment, and the complex realities of power generation, advocating reforms that could redefine the country’s energy future.
In this exclusive conversation, King Richard Igimoh, Group Editor at African Leadership Magazine UK, engages Dr. Ogaji on the pressing issues shaping Nigeria’s electricity landscape. The discussion examines the struggles facing generation companies, the financial and regulatory hurdles confronting the industry, and the urgent need for stronger alignment between government, power producers, and distribution companies to deliver a more stable and sustainable electricity supply. With candour and deep industry insight, she offers a rare perspective on the challenges, opportunities, and critical decisions that will ultimately determine how, and whether, Nigeria powers its growth.
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Excerpt
Leadership & Sectoral Influence
You have played a pivotal role across the evolution of Nigeria’s power sector, from the privatization of PHCN assets to leading the Association of Power Generation Companies. How would you assess the success of Nigeria’s power sector reforms, and where do you believe the most critical gaps still exist today?
Indeed, my journey in Nigeria’s power sector began in 2011, during a period when former President Goodluck Ebele Jonathan encouraged Nigerian professionals in the diaspora to return home and contribute to the reform of the power sector. Since then, a significant portion of my professional experience has been shaped by leadership and management roles within the Nigerian electricity industry.
I currently serve as the pioneer Managing Director/CEO and Executive Secretary of the Association of Power Generation Companies (APGC), where I manage the collective interests of over twenty-six generating power stations while interfacing with regulators, policymakers, investors, and other stakeholders across the power value chain.
Prior to this role, I served as Team Lead of the Regulatory and Transactions Monitoring Unit of the Presidential Task Force on Power (PTFP). In that capacity, I was directly involved in monitoring, evaluating, and facilitating the completion and handover of the unbundled Power Holding Company of Nigeria (PHCN) assets to private investors. My responsibilities included benchmarking investor performance against contractual obligations and approved business plans.
My work also involved close collaboration with development partners such as the World Bank, African Development Bank (AfDB), USAID, Power Africa, NEXANT, and DFID. I contributed to drafting concept papers and Terms of Reference (TORs), as well as reviewing key management agreements, including the Manitoba Hydro management contract for the Transmission Company of Nigeria (TCN).
In addition, I served as Legal Adviser to the Presidential Task Force on Power and its Chairman, supporting all legal and regulatory aspects of the privatization programme implemented by the Bureau of Public Enterprises (BPE) and the Nigerian Electricity Regulatory Commission (NERC). My professional experience spans both Nigeria and the United Kingdom, with extensive exposure to energy-sector agreements, including gas transportation and purchase agreements, regulatory frameworks, and electricity market rules.
Assessing Nigeria’s Power Sector Reform
Energy remains fundamental to economic diversification and national development. Access to reliable electricity directly influences productivity, healthcare delivery, education outcomes, and overall quality of life. Today, however, an estimated 50% of Nigerians still lack access to grid electricity.
Recognizing these challenges, the Federal Government initiated comprehensive reforms aimed at transforming the sector. Historically, the National Electric Power Authority (NEPA), established in 1972 under Decree No. 24, operated as a vertically integrated monopoly responsible for generation, transmission, and distribution. As seen globally, such monopolies often suffer from inefficiency, underinvestment, and poor service delivery—and Nigeria was no exception.
Persistent operational inefficiencies, limited capital investment, and the absence of commercial orientation led to the introduction of the National Electric Power Policy (NEPP) in 2001. The policy sought to achieve four key objectives:
1. Reliable, round-the-clock electricity supply
2. Injection of private-sector capital and expertise
3. Establishment of an independent electricity regulator
4. Creation of a sustainable and competitive electricity market
These reforms were subsequently codified through the Electric Power Sector Reform Act (EPSRA) of 2005. EPSRA enabled the restructuring of NEPA into the Power Holding Company of Nigeria (PHCN) and its eventual unbundling into:
• Eleven (11) Distribution Companies (DisCos)
• Six (6) Generation Companies (GenCos)
• One (1) Transmission Company (TCN)
On November 1, 2013, the restructured assets were formally handed over to private investors. While the transmission segment remained government-owned, 60% equity in distribution companies was sold to private investors, with government retaining 40%. Thermal generation companies were privatized through a combination of outright sales and partial equity transactions, while hydro plants were concessioned to Mainstream Energy Solutions (Kainji and Jebba) and North-South Power Company (Shiroro).
Performance Agreements formed a central pillar of the privatization framework, clearly outlining operational and investment obligations for both generation and distribution companies. However, the anticipated improvements in sector performance have yet to be fully realized.
Outcomes and Sector Challenges
Privatization introduced market discipline but also increased operational complexity. The transition from government ownership to private investment brought new cost considerations, including financing costs and shareholder return expectations—factors absent under the former NEPA/PHCN structure.
According to the Tracking SDG7: The Energy Progress Report 2021, published by the World Bank, IEA, IRENA, the United Nations, and WHO, Nigeria ranked among the countries with the largest electricity access deficits globally, with approximately 90 million people lacking electricity access. Even among those connected to the grid, supply remains unreliable, often limited to only a few hours daily.
The consequences are significant: nearly 90% of industrial consumers—and many residential users—self-generate electricity at substantial cost, reducing competitiveness and placing additional strain on the economy.
Although Nigeria has an installed generation capacity exceeding 14,000MW and available generation capability above 7,000MW, average actual generation remains around 3,500MW due to constraints across the entire value chain. With a population estimated at over 240 million people, Nigeria’s per capita electricity consumption stands at approximately 136 kWh, compared to a global average of about 3,670 kWh—one of the lowest levels worldwide.
Successes and Remaining Gaps
From a structural perspective, Nigeria achieved what many countries struggled to accomplish: the simultaneous privatization of both generation and distribution segments. This bold reform attracted significant international attention, with several countries studying Nigeria’s model.
In the immediate post-privatization period, measurable improvements were recorded. Installed capacity increased, operational efficiencies improved, and private capital was deployed to rehabilitate aging infrastructure.
However, while the reform design was fundamentally sound, outcomes have been constrained by implementation challenges. The most critical gaps include:
• Weak post-privatization monitoring and enforcement of performance agreements
• Policy inconsistency and political interference
• Incomplete electricity market transition and absence of fully cost-reflective tariffs
• Institutional discontinuity and erosion of technical expertise
In essence, Nigeria’s power sector reform succeeded in structure but has underperformed in execution. Addressing this execution gap remains the central challenge facing the sector today.
The Power Sector Paradox
Nigeria continues to face a paradox of installed generation capacity versus actual delivered power. From your vantage point, what are the structural bottlenecks across generation, transmission, and distribution that must be urgently addressed to unlock full capacity utilization?
Nigeria’s power sector operates as an interconnected tripod comprising generation, transmission, and distribution. While these are the visible pillars of the electricity value chain, there is also an important “invisible leg” — the demand side, consisting of residential and industrial consumers whose consumption patterns ultimately determine market sustainability.
Generation companies produce electricity, transmission evacuates and steps it down across the national grid, and distribution companies deliver power to end users. For the system to function efficiently, all three segments must operate in balance. Unfortunately, weaknesses across each segment have created the paradox Nigeria faces today: significant installed capacity but limited delivered power.
According to the Nigerian Independent System Operator (NISO), Nigeria’s installed generation capacity exceeds 14,000 megawatts, with approximately 7,000 megawatts currently available. However, due to systemic constraints within transmission and distribution, actual delivered power fluctuates between 3,500 and 4,000 megawatts, leaving a substantial portion of capacity effectively stranded.
Generation-Side Constraints
At the generation level, the primary challenge is financial sustainability. Power generation companies face severe liquidity constraints that limit their ability to maintain equipment and meet operational obligations.
Most generating equipment is supplied and serviced by original equipment manufacturers such as General Electric and Siemens Energy, with payments denominated in foreign currency. While GenCos earn revenue in naira, critical operational expenses — including spare parts, maintenance, and technical services — are effectively dollarized.
Limited access to foreign exchange further compounds this challenge. The gap between official exchange rates and actual market access creates additional financial exposure for operators.
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Taxation also presents a significant burden. Despite receiving only about 35% of total invoiced payments, generation companies remain liable for full obligations such as Value Added Tax (VAT) on gas transportation and Company Income Tax (CIT), which exceeds 30%. This creates a fundamental mismatch between revenue realization and statutory tax expectations, raising difficult questions about how operators can sustainably meet tax obligations under current payment realities.
Transmission Constraints
The transmission segment remains fully government-owned under the Transmission Company of Nigeria (TCN). While critical to system stability, the network is constrained by ageing infrastructure and limited wheeling capacity, preventing it from fully evacuating available generation.
Key challenges include:
• Insufficient transmission capacity relative to available generation
• Grid instability and limited redundancy
• Underinvestment in modernization and network expansion
As a result, power that could otherwise be delivered to consumers cannot be transmitted efficiently across the grid.
Distribution Constraints
The distribution segment represents the weakest link in the value chain. Persistent cash-flow challenges have limited the ability of distribution companies to invest adequately in infrastructure upgrades.
Major issues include:
• High Aggregate Technical, Commercial, and Collection (ATC&C) losses
• Low metering penetration and significant revenue leakages
• Weak collection efficiency and constrained capital investment
These deficiencies reduce sector revenues and reinforce liquidity shortages across the entire market.
A Market Design Challenge
The paradox Nigeria faces is ultimately a market failure — specifically, the failure to fully uphold the commercial framework established during privatization. When contractual payment obligations are not consistently honored, liquidity collapses across the value chain, preventing generators from maintaining assets or expanding capacity.
A well-structured and enforceable payment model is therefore essential. Generation companies are capable of producing more power, but transmission and distribution infrastructure must be strengthened to evacuate and deliver that power efficiently.
Where grid constraints persist, regulatory and policy reforms should enable generators to supply electricity directly to large industrial users. Direct industrial supply would stimulate production, improve revenue certainty, and reduce stranded generation capacity.
Demand Structure Imbalance
Another structural issue lies in Nigeria’s electricity consumption pattern. Currently, approximately 91% of distributed power is consumed by residential users, while only about 9% serves industrial consumers. In many advanced economies, the reverse is true, with industrial consumption driving economic productivity and sectoral stability.
Rebalancing electricity consumption toward productive industrial use would significantly strengthen economic growth while improving the financial viability of the power sector.
Path to Unlocking Full Capacity
In summary, Nigeria’s power sector bottlenecks span the entire value chain:
Generation
• Gas supply and pricing constraints
• Legacy infrastructure requiring continuous rehabilitation
• Payment uncertainty affecting operational sustainability
Transmission
• Limited wheeling capacity
• Grid instability
• Insufficient modernization investment
Distribution
• High ATC&C losses
• Metering deficits and revenue leakages
• Weak governance and limited capital deployment
These inefficiencies create a cascading effect: generation capacity cannot be fully evacuated, and available electricity is neither efficiently delivered nor monetized.
Unlocking full capacity utilization will require simultaneous and coordinated reforms across generation, transmission, and distribution, rather than isolated interventions within individual segments.
Financial Viability & Market Liquidity
The current market structure faces significant liquidity constraints, which pose a direct threat to sustainability. What must be done to restore financial viability in Nigeria’s power market?
Nigeria’s electricity market is currently constrained by severe liquidity challenges that threaten the long-term sustainability of the sector. At the core of this problem is a persistent revenue shortfall driven by non–cost-reflective tariffs, weak collection efficiency, and poor payment discipline across the value chain.
Despite meeting their operational obligations, generation companies experience significant payment deficits. This imbalance has resulted in:
• Accumulated sectoral debt running into trillions of naira
• Difficulty servicing acquisition and operational financing obligations
• Reduced capacity for reinvestment and capital expansion
Under the present structure, the electricity market is not financially sustainable without continuous government intervention.
The fundamental issue is that the sector operates under commercial expectations but without commercially viable revenue recovery mechanisms. This disconnect undermines investor confidence and weakens the entire market framework.
To restore stability and rebuild confidence, several reforms are essential:
• Transition to fully cost-reflective tariffs, complemented by targeted subsidies strictly limited to vulnerable consumers
• Strict enforcement of market rules and payment obligations across all participants
• Strengthening credit enhancement and payment security mechanisms to improve liquidity flows
• Clear separation of commercial market operations from social policy objectives
A financially viable power sector must operate on transparent commercial principles supported by predictability, accountability, and regulatory consistency. Without restoring market liquidity, operational improvements alone cannot deliver sustainable sector growth.
Policy, Regulation & Political Will
You have consistently emphasized the importance of political will and policy coherence in driving sectoral transformation. In practical terms, what specific policy actions should government prioritize in the next 12–24 months to catalyse real, measurable change in power delivery?
The Nigerian government has articulated ambitious long-term targets for the electricity sector, centred on expanded energy access, renewable energy development, and emissions reduction.
Under the 30:30:30 Electricity Vision, Nigeria aims to achieve 30 gigawatts (30,000MW) of installed on-grid capacity by 2030, with approximately 30% of generation derived from renewable energy sources. The broader policy framework also targets 90% electrification by 2030, universal access by 2040, and significant emissions reductions under Nigeria’s Nationally Determined Contributions (NDCs) to the Paris Agreement.
Nigeria has committed to reducing greenhouse gas emissions by 20% unconditionally and up to 45% conditionally by 2030, with over 60% of projected reductions expected to come from the power sector. These commitments were reinforced internationally during the 2016 United Nations Climate Change Conference in Marrakech.
While these goals are commendable, their success depends fundamentally on government’s ability to align institutions, policies, and implementation frameworks around transparency, accountability, and execution discipline.
At present, progress toward renewable integration remains limited. Apart from the country’s major hydroelectric plants, grid-connected renewable capacity remains minimal. Notably, fourteen solar photovoltaic projects signed power purchase agreements in 2016, representing nearly 1GW of planned capacity, but none achieved financial close. This raises legitimate concerns about how renewable targets will be achieved under current conditions.
Institutional overlap, unclear mandates, and policy inconsistency continue to create fragmented accountability and investment uncertainty.
The Way Forward
To catalyse measurable progress within the next 12–24 months, government should prioritize the following actions:
1. Establish a Clear Long-Term Sector Framework
Develop realistic, multi-year policy and regulatory models grounded in measurable outcomes rather than short-term political objectives. Planning must reflect technical and financial realities while presenting a credible pathway to sustainability.
2. Optimize Existing Capacity
Prioritize policies that maximize utilization of installed and available generation capacity before pursuing large-scale expansion projects.
3. Strengthen Sector Governance and Oversight
Undertake a comprehensive review of sector restructuring and governance arrangements to improve operator performance and accountability.
4. Enhance Regulatory Effectiveness
Assess the performance and mandates of regulatory institutions, particularly NERC and NEMSA, to ensure they promote cost recovery, service quality, and market discipline.
5. Reform Pricing and Subsidy Design
Address tariff-setting and subsidy frameworks to support financial viability while protecting vulnerable consumers through targeted interventions.
6. Review Market Design and Post-Reform Outcomes
Evaluate nearly a decade of post-privatization market operations within the Nigerian Electricity Supply Industry (NESI) to identify structural gaps and necessary preconditions for a fully functional wholesale electricity market.
7. Develop a Post-Privatization Roadmap
A critical missing element is a clearly articulated post-privatization roadmap led by strong sector leadership committed to building a commercially viable electricity market in which all participants are held accountable.
Immediate Governance Priorities
• Elevate power sector reform to a national priority with direct presidential oversight
• Guarantee sanctity of contracts and enforce market discipline
• Strengthen regulatory transparency and merit-based leadership appointments
• Align policies across ministries, agencies, and institutions
• Establish clear mandates supported by measurable Key Performance Indicators (KPIs) with regular performance reviews
Transforming Nigeria’s power sector ultimately requires decisive and sustained political will translated into consistent policy action. Policy coherence, institutional discipline, and continuity of reform are essential to restoring investor confidence and delivering measurable improvements in power supply.
Energy Transition & Future Readiness
With global momentum shifting towards renewable energy and climate resilience, how is Nigeria’s generation sector positioning itself within the energy transition conversation, and what role do GenCos play in balancing fossil-based generation with emerging clean energy solutions?
The global energy transition is both real and inevitable, and Nigeria’s generation sector is actively engaging in that transition. However, the conversation must remain grounded in Nigeria’s developmental realities. The growing global emphasis on renewables should not obscure the immediate challenges facing the country’s conventional generation base.
Nigeria is a gas-rich nation, with approximately 70% of grid electricity generated from gas-fired thermal plants. A just and responsible energy transition for Nigeria therefore requires maximizing existing gas resources while simultaneously building renewable capacity — not prematurely abandoning thermal generation before renewable alternatives reach sufficient scale and reliability.
Members of the Association of Power Generation Companies (APGC) are already exploring cleaner energy pathways. Several generation companies are investing in solar and hybrid generation systems, while the provisions of the Electricity Act have created new opportunities for distributed generation and off-grid solutions.
Nigeria’s energy transition must ultimately be locally defined — calibrated to national development priorities, grid limitations, and the realities of widespread energy poverty. A transition driven solely by external ideological pressures, without addressing domestic energy access challenges, risks deepening rather than solving existing deficits.
In the medium term, thermal generation — particularly gas-fired power — will remain central due to its reliability and grid-stabilizing advantages. At the same time, renewable integration is steadily increasing, particularly in solar energy deployment.
Generation companies are currently:
• Exploring hybrid generation models combining gas and renewable sources
• Investing in efficiency improvements to reduce emissions intensity
• Supporting grid readiness for renewable energy integration
The objective is not an abrupt transition, but a balanced energy mix that guarantees reliability, affordability, and environmental sustainability.
Infrastructure & Systems Integration
There is a growing consensus that generation is only one part of a much wider ecosystem challenge. How can Nigeria better align its transmission infrastructure, gas supply framework, and distribution networks to create a truly integrated and efficient power value chain?
A fully functional power sector requires seamless coordination across generation, transmission, gas supply, and distribution. Electricity delivery is only as strong as the weakest link in this interconnected system.
Nigeria’s current challenges largely stem from fragmentation across these components rather than a lack of generation capacity alone.
Key integration gaps include:
• Misalignment between generation output and transmission wheeling capacity
• Inconsistent and unreliable gas supply affecting thermal generation
• Distribution constraints that limit effective power evacuation and revenue recovery
Addressing these challenges requires a system-wide approach rather than isolated reforms.
Nigeria should prioritize the following actions:
• Implement integrated resource planning across the entire power value chain
• Strengthen coordination between the electricity and gas sectors through aligned policy and commercial frameworks
• Accelerate investment in grid expansion, modernization, and redundancy
• Deploy advanced monitoring, automation, and control systems to improve system reliability and operational visibility
The power sector must function as a single coordinated ecosystem, rather than as fragmented institutional entities operating in silos. True efficiency will only emerge when planning, investment, and operations are aligned across the entire value chain.
Investment Climate & Global Partnerships
Given your extensive experience working with international development partners such as the World Bank, AfDB, and USAID, what lessons can Nigeria draw in structuring partnerships that attract long-term capital while ensuring local value creation and sector sustainability?
International capital is patient, but it is not naïve. Investors seek environments defined by the rule of law, sanctity of contracts, and credible regulatory governance. Nigeria possesses strong investment fundamentals — abundant gas resources, growing electricity demand, favourable demographics, and clear political ambition. The primary gap remains consistency in execution.
Several key lessons emerge for structuring effective global partnerships.
First, partnerships must deliberately create local value through technology transfer, skills development, and strong local content participation in construction, operations, and maintenance.
Second, concessional financing from development finance institutions should serve as a catalyst, not a substitute, for domestic private-sector investment. Sustainable markets ultimately depend on commercially viable private participation.
Third, the legal and regulatory environment must inspire confidence. Delays in tariff adjustments, payment uncertainties under Power Purchase Agreements (PPAs), and perceived interference in commercial arrangements have negatively affected investor sentiment.
APGC remains open to credible partnerships, but government must consistently demonstrate that it is a reliable contractual counterparty.
Effective partnerships require:
• Clear and bankable regulatory frameworks
• Transparent procurement and contracting processes
• Robust risk mitigation instruments, including guarantees and credit enhancements
• Alignment between public policy objectives and private-sector incentives
Investors are fundamentally attracted to predictability and credibility. Where policies remain stable and contracts are respected, capital naturally follows.
Equally important, partnerships must prioritize local capacity development to ensure long-term sustainability and knowledge transfer within the sector.
Personal Leadership Philosophy
You are widely regarded as a forthright and reform-driven voice in the sector. What personal leadership principles have guided your journey, and what advice would you offer the next generation of African energy leaders navigating similarly complex systems?
Over more than a decade in the power sector — spanning government advisory roles, legal practice in Nigeria and the United Kingdom, academia at Coventry University, and leadership within the generation community — my leadership philosophy has remained consistent: be forthright, remain technically grounded, and never allow complexity to become an excuse for inaction.
I have witnessed the sector navigate privatization, policy reversals, debt crises, grid collapses, and now the global energy transition debate, all while the fundamental challenge of sustainable electricity payment remains unresolved.
My leadership approach is anchored on three core principles:
• Integrity and transparency, even when inconvenient
• Evidence-based decision-making grounded in technical and commercial realities
• Commitment to meritocracy and strong institutions
To the next generation of African energy leaders, my advice is clear:
• Master your brief completely — effective advocacy requires deep technical understanding
• Speak truth to power, including to international stakeholders whose prescriptions may not always align with Africa’s realities
• Build coalitions, because systemic reform is never achieved by a single voice
• Develop resilience — reform in complex systems is rarely linear and often involves setbacks
Energy leadership extends beyond electricity provision. It is fundamentally about dignity, productivity, and shaping the future of our societies. With principled leadership and sustained commitment, the energy sector can remain one of Africa’s most powerful engines of economic transformation.
