Energy zones and what they mean for Nigeria’s power sector
By Mathew Ibiyemi
Nothing screams “progressive reform” quite like telling a citizen that his or her electricity supply might remain unstable so that a manufacturer can chill executive water bottles at sub-zero temperatures.
Yet, that appears to be the direction of a potentially significant shift in Nigeria’s power sector.
After years of financial constraints in the electricity value chain, persistent darkness in many parts of the country and recurring national grid collapses, the Federal Government is proposing a strategy that identifies high-demand commercial and industrial hubs—such as Lagos, the Abuja-Kaduna-Kano corridor and the Enugu-Port Harcourt axis—and prioritises them for 24-hour, uninterrupted electricity supply.
When Joseph Tegbe assumed office as Minister of Power, he identified a critical problem confronting the sector.
“The problem of the power sector, I would say, is largely financial,” he said.
He explained that the lack of liquidity affects the entire power value chain, ultimately undermining reliable electricity delivery to homes and businesses.
From the inability to settle gas debts owed to generating companies to the funding required to replace ageing transmission infrastructure, the Minister has highlighted the financial constraints weighing on the sector, while acknowledging the technical challenges that also need to be addressed.
The Federal Government’s strategy is aimed at tackling distribution bottlenecks, unlocking industrial demand and helping electricity distribution companies reduce their persistent losses. At the heart of the energy-zones concept is the idea that economically productive areas, where electricity demand and payment capacity are stronger, can help generate the cash flow needed to sustain the wider electricity market.
There are signs that electricity collection rates are gradually improving among distribution companies, according to data from the Nigerian Electricity Regulatory Commission (NERC). Yet, a significant number of Nigerians remain unwilling or unable to pay for the electricity they consume, while illegal connections continue to undermine the system.
The proposed energy zones therefore focus on the productive side of the economy—businesses and industries that require reliable electricity to expand production, create jobs and contribute to national economic growth.
Consider the economics.
For a manufacturer, reliable electricity can mean spending less on diesel and generators. Lower energy costs translate into lower production costs, which can ultimately reduce the prices of goods and services for consumers.
Designating specific industrial and commercial corridors for 24/7 power is intended to bridge the gap between available generation and actual electricity consumption. More importantly, it could create a concentration of paying customers capable of generating steadier cash flow for companies across the electricity value chain.
The energy-zones initiative is a significant gamble, no doubt. If it succeeds, it could help revive manufacturing, reduce production costs and demonstrate that Nigeria’s electricity infrastructure can deliver round-the-clock reliability somewhere beyond the realm of policy documents and promises.
There are already examples suggesting that targeted and dedicated power supply can work.
Projects such as the Agbara Independent Power Plant and the Azura Power Plant demonstrate the potential of private and dedicated power infrastructure to support industrial and commercial activity.
There are also lessons from the Rural Electrification Agency (REA), which has implemented targeted electrification projects for agricultural communities and universities. According to the agency, its projects include more than 200MW of installed capacity across 15 universities and over 1,000 mini-grid projects across more than 23 states, including recent installations in Oke-Uyi, Kwara State, and Epe, Lagos State.
The Federal Government is also looking beyond the creation of economic zones.
Most recently, the Minister of Power performed the groundbreaking ceremony for a National Control Centre in Osogbo, a project intended to strengthen Nigeria’s ability to manage the growing and projected demands on the electricity system.
Once completed, the centre is expected to deploy modern computer systems, large display screens and advanced data tools to help system operators detect developing faults, plan preventive maintenance and optimise the use of existing generation and transmission assets.
It is also expected to improve responses to grid disturbances, support the integration of renewable energy and strengthen Nigeria’s coordination within the West African Power Pool, while enhancing physical and cybersecurity.
But even if the energy-zones strategy works, the real test will begin after the lights come on.
If industrial hubs begin to enjoy steady electricity and generate stronger revenues for the power sector, citizens must hold the Minister and other authorities accountable for what happens next. The revenue generated from these economically viable zones must not simply sustain a handful of privileged corridors. It should help finance the expansion and rehabilitation of electricity infrastructure in other parts of the country.
That is the difference between an energy zone and an energy enclave.
If properly implemented, energy zones could become a stepping stone towards a more financially sustainable electricity market—one in which reliable power first supports the most productive parts of the economy and, over time, helps strengthen the entire national system.
The ultimate goal should not be to create islands of electricity in a country still struggling with darkness.
It should be to make those islands the beginning of a bridge to universal reliability.
Mathew Ibiyemi, an energy journalist, writes from Lagos, Nigeria.
