How is the power sector in Nigeria set up?
Generation companies (GenCos) and distribution companies (DisCos) were privatised in 2013. The Transmission Company of Nigeria (TCN) is state-owned. Nigerian Bulk Electricity Trading (NBET) has bought power from GenCos under PPAs.
The Nigerian Electricity Regulatory Commission (NERC) is the central regulator. Under the Electricity Act 2023, states can set up their own electricity markets and regulators, and NERC has transferred oversight to a growing number of states.
Key projects and programmes
These are public, well-documented examples from the sources below. They show how the market works.
- Gas-fired power stations, which provide most grid power.
- Hydro stations such as Kainji, Jebba, and Shiroro, run under concession.
- Solar mini-grids and captive power for industry, supported by programmes from the Rural Electrification Agency.
How are projects financed?
Grid-connected IPPs have relied on PPAs with NBET or DisCos, sometimes with World Bank partial risk guarantees. Payment shortfalls in the market have made these harder to finance.
Captive power, mini-grids, and power sold directly to industrial users are often financed with sponsor equity, DFI loans, and local bank debt, based on the credit of the end buyer.
What should investors, lenders, and off-takers check?
Common checks include:
- The payment record of the buyer and any guarantees.
- Naira currency risk and access to US dollars.
- Whether the project falls under NERC or a state regulator.
- Gas supply contracts for gas-fired plants.
Where does Vektron Merchants fit?
Nigeria is one of the six countries covered by the Vektron Merchants African Gateway. Vektron Merchants is a marketing agency for energy, commodities, infrastructure financing and industrial firms. We find buyers, offtakers, lenders and partners for companies in these four industries, and we secure meetings with the people who sign.
Frequently asked questions
Who regulates electricity in Nigeria?
NERC regulates the national and interstate market. Under the Electricity Act 2023, states can regulate electricity within their borders once oversight is transferred from NERC.
What is a DisCo in Nigeria?
A privately owned electricity distribution company that buys power and sells it to customers in its area.
Sources
Related
General information, not investment, legal or tax advice. Facts are from the public sources listed and may change.