Who is really to blame for Nigeria’s darkness?

By Adetayo Adegbemle

Every time the lights go out in your home, your first instinct is probably to blame EEDC, IKEDC, or whichever distribution company serves your area. It is a reasonable instinct – they are the last face of the electricity supply chain, the ones whose name appears on your bill. But what if the data showed that your DisCo was actually paying most of what it owes? What if the real problem was sitting in a government office, not a DisCo boardroom?

That is exactly what the numbers are telling us – and it is a story Nigeria needs to hear clearly.

Your DisCo Is Paying. The Government Isn’t.

In the third quarter of 2025, Nigeria’s electricity distribution companies (DisCos) collectively paid 93.04 per cent of their financial obligations to the Nigerian Bulk Electricity Trading Company (NBET). In Q2, the rate was 95.77 per cent. For the full year 2025, DisCos accounted for 93.80 per cent of all remittances collected in the sector.

These are not the figures of companies robbing the system. These are businesses operating at near-full compliance in an environment stacked against them.

Meanwhile, the Federal Government accrued N1.93 trillion in electricity subsidy obligations in 2025 alone – and paid only N76.95 billion of it. That is less than 4 kobo for every naira owed. Out of the N1.92 trillion that generation companies (GenCos) were owed beyond DisCo payments, 96 per cent – N1.85 trillion – came from the government’s failure to honour its subsidy commitments. Not from DisCos. Not from private investors. From the government.

By December 2025, the sector’s total accumulated debt had crossed N6 trillion. Experts say it could hit N8.8 trillion before the end of 2026. That is not a power sector problem. That is a budget integrity problem.

The Tariff Lie We’ve Been Living With

Here is the honest truth that politicians rarely say out loud: Nigerian electricity consumers have been paying artificially low tariffs for decades – and someone has to make up the difference. That someone has been the Federal Government, in the form of subsidies. But the government has been promising to pay this subsidy and then not paying it, creating a hole in the system that gets bigger every single month.

Apart from briefly in 2023 Tariff Review, Nigeria has not had a cost-reflective electricity tariff since 2012. Since then, the naira has crashed, gas prices have soared, diesel costs have doubled, and infrastructure maintenance has become more expensive – but electricity prices for most consumers remained frozen. The result? A sector that cannot pay its own bills, generation companies that cannot buy gas, and gas companies that cannot invest in production. It is a domino chain of unpaid obligations, and the first domino is a government too afraid to tell Nigerians the real cost of electricity.

The April 2024 tariff adjustment – which raised Band A tariffs to N225 per kilowatt-hour – was a bold step. It showed what happens when tariffs move toward reality: revenue collection improved, and some DisCos recorded their highest remittance rates ever. But Band A covers only the best-served customers. For everyone else, the subsidy machine rolls on – and the government remains behind on payments.

Good Investors, Bad Policy

Here is what is most troubling about this situation: it is not rogue or incompetent investors driving the crisis. Some of Nigeria’s most reputable private sector names are invested in this sector. They came in after the 2013 privatisation with genuine capital, genuine plans, and genuine expectations that the government would hold up its end of the deal – primarily by maintaining a coherent tariff policy and paying its subsidy commitments. Yes, there were gaps in the 2013 Privatization, but since then, we have had eight New Core Investors with track records in other sectors of the Economy.

Those expectations have been repeatedly disappointed. Not because investors miscalculated the technical challenges, but because government policy kept shifting beneath them. Tariff orders were delayed or reversed. Subsidy payments were promised and withheld. The regulatory framework changed without adequate transition periods. In any country in the world, you cannot build a sustainable infrastructure business on a foundation of policy reversals. Nigeria is not unique in that regard – it is simply living out the consequences faster than most.

The damage goes beyond existing investors. International development finance institutions, pension funds, and infrastructure investors who might otherwise bring patient capital to Nigeria’s power sector are watching this story closely. What they see is a sector where even compliant operators cannot break even, because the government will not keep its promises. That perception has a price – measured in megawatts of generation capacity that never gets built.

A Better Path: Let States Lead

The good news – and there is good news – is that Nigeria passed a law in 2023 that, if properly implemented, could change everything.

The Electricity Act 2023 removed electricity from the Federal Government’s exclusive control and empowered states to regulate their own electricity markets. States can now issue their own licences to private investors, develop independent power infrastructure, and build electricity markets that are insulated from the chaos of federal policy cycles. This is not a radical idea. 

It is the model that has worked in larger democracies and federations from the United States to India.

Abia State has already shown what is possible. A partnership with Geometric Power has given factories in the state over 23 hours of uninterrupted power daily – something that seemed unimaginable under the national grid. Factories have returned. Jobs have come back. That is the power of localised, accountable regulation.

Multi-state partnerships take this further. States that share industrial corridors, transmission routes, or rivers can co-invest in generation projects that serve multiple markets at once. This is how you attract the kind of large-scale investment Nigeria needs – not by waiting for a federal bureaucracy to align its political interests with market realities, but by building smaller, more credible investment environments from the ground up.

What We Must Demand

Every Nigerian who has sat in darkness deserves to understand what is actually broken – and to demand that the right things be fixed.

We must demand that the Federal Government publish a clear, time-bound plan to phase in cost-reflective tariffs across all customer bands – with targeted, properly funded relief for genuinely low-income households, rather than a blanket subsidy that, as the World Bank has noted, disproportionately benefits the wealthy.

We must demand that subsidy obligations – when they exist – be paid on schedule, not accumulated silently into a multi-trillion-naira debt that the next generation will inherit.

We must demand that state governments that have not yet enacted electricity market laws under the 2023 Act do so urgently – because every month of delay is another month of preventable darkness.

And we must stop blaming the distribution companies for a crisis that is, in overwhelming measure, a failure of government policy, not private sector performance.

The darkness is not inevitable. It is a choice – made every time a tariff decision is postponed, a subsidy goes unpaid, or a state government chooses inaction over reform. Nigeria has the legal tools to build a better power sector. What it needs now is the political will to use them.

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