Despite deepening liquidity woes and electricity grid constraints, Nigeria’s Generation Companies (GenCos) are doubling down on capacity expansion.
  
The development shows optimism and frustration with the country’s power sector woes.
  
Mainstream Energy Solutions, the concessionaire of the Kainji Hydropower Plant, last week added another 80MW to the national grid following the rehabilitation of a long-dormant unit.
  
This brings Kainji’s recovered capacity to 600MW, a significant leap for a facility that was non-functional in 2013.

At the newly completed Zungeru Hydropower Plant, only two of the four installed turbines are in use.

The remaining units sit idle, not for lack of water or will, but due to a lack of infrastructure to evacuate the power. The $1.3 billion project, funded by a loan from the Export-Import Bank of China, is at risk of becoming another white elephant unless the system’s structural weaknesses are addressed.
  
Although the Minister of Power, Adebayo Adelabu stated that the Federal Government is making efforts to complete infrastructure upgrades to wheel stranded electricity in generating plants like Zungeru, Nigeria has been in the same cycle for years where homes lack electricity but power generation companies, including government owed Niger Delta Power Company are pushing ways that the electricity they generate can be evaluated and paid for.
  
Managing Director of Mainstream, Lamu Audu, said most of the generation companies entered into agreements with the government at takeover and must play their part before holding the government accountable.
  
He noted that when the company took over the Kainji and Jebba hydropower plants in 2013 under a concession agreement with the Federal Government of Nigeria, none of the generating units were operational.
  
Faced with idle infrastructure and no immediate revenue, the company launched a phased capacity recovery plan through its internal technical team and limited early revenue to begin restoring the turbines. Some units were partially recovered using in-house designs and local expertise, including Unit 1G5, which delivered 20MW even while still under testing.
 
 “We now have six out of eight units running, but the reality is that most of the energy cannot reach end-users due to grid limitations and a market system that penalises performance.
  
The government-owned plant, concessioned to the company in 2013 with a key performance indicator of recovering the plant to its nameplate capacity of 760MW with the new development, has witnessed about 80 per cent overhauling.
  
Lamu noted that the country has also designed plans through the West African Power Pool to serve not only Nigeria, but also other African countries, and it is critical to ramp up generation and expect the government and the regional body to tap into countries energy resources, which is cheaper to generate than other African countries.
  
Lamu noted that the GenCos’ efforts aren’t just about numbers but a sign of corporate responsibility.
  
“We continue to invest despite not receiving full payment for our energy deliveries. Barely 30 per cent of our invoices are paid, yet we’re pushing forward, fulfilling our end of the agreement,” he said.

One of the biggest barriers to sustainability, he said, is not just the financial shortfall, but the poor infrastructure for power evacuation.
  
“What sense does it make to recover capacity if there’s no way to evacuate it?”
  
Still, there’s a silver lining. The Nigerian government, he said, has begun to show more openness to cross-border electricity trading. “The policy space is improving. Nigeria has the cheapest electricity in West Africa and a unique opportunity to export to neighbouring countries. But again, we face infrastructure and synchronisation challenges, especially within the West African Power Pool,” Lamu noted.
  
Lamu believes that if allowed to export a portion of power, it could reduce reliance on the government and earn valuable foreign exchange for the country.
“We’re not saying we want to sell everything abroad, but a portion, say 10 to 15 per cent could significantly ease the pressure,” Lamu said.
  
In just the first two months of 2024, generation companies lost N27.14 billion as 4,724.76MW of capacity was left stranded. With an average monthly loss of N13.57 billion, cumulative losses this year could top N162 billion if trends persist.

At the heart of the crisis is a dysfunctional payment structure. Despite partial contract activation in 2022 and revised market rules, GenCos say they receive just 9 to 11 per cent of their market invoices, a result of the controversial ‘payment waterfall’ that prioritises full settlement of dues to government agencies like the Nigerian Bulk Electricity Trading Plc (NBET), the Market Operator, and the Nigerian Electricity Regulatory Commission (NERC).

From less than 4,000MW at the time of privatisation in 2013, Nigeria’s installed generation capacity has risen to around 13,000MW. However, actual delivery to consumers rarely exceeds 5,000MW, largely due to poor transmission capacity and chronic distribution bottlenecks. With DisCos unable or unwilling to offtake available power, the cycle of losses continues.

According to NERC Commissioner, Chidi Ike, the government is aware of the systemic inefficiencies and is working on improving grid stability through investments in the Supervisory Control and Data Acquisition (SCADA) system and other transmission upgrades under the Presidential Power Initiative.

“They’ve done incredibly well at Kainji, moving from zero to over 600MW,” Ike said during a recent tour of the plant. “But the reality is that without a stable and responsive grid, that power won’t reach Nigerians. That’s why we’re focusing on real-time visibility and control.”

Ike noted that a staggering 20,000MW of capacity currently lies in self-generation, mostly through diesel and gas generators in industrial estates and commercial centres. The proliferation of captive generation is both a symptom and a consequence of grid unreliability, he said.

“The grid does not reflect Nigeria’s true load,” he explained as he added that “Many industries have opted out of the public supply system entirely. Our goal is to create a market where generation, transmission, and distribution work in harmony and where investors can recover their costs.”