Nigeria has installed generation capacity several times greater than what its grid typically delivers. Understanding why requires looking past power stations to the flow of money through the sector.
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Electricity is generated by companies that sell to a bulk trader, which sells to eleven distribution companies, which bill customers. Each link depends on the one below it paying. When distribution companies collect only a portion of what they bill, because a large share of customers are unmetered and billed on estimate, the shortfall travels back up the chain. Generators are paid a fraction of their invoices, cannot service gas suppliers, and gas suppliers reduce deliveries. Plants then sit idle for want of fuel rather than for want of capacity.
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Transmission is the second constraint. The national grid carries a limited load and has historically been prone to system collapse when frequency moves outside a narrow band. Reforms allowing states to regulate their own electricity markets have opened a route to embedded generation and localised distribution, and several states have begun to use it.
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The policy question is not whether to build more plants. It is whether tariffs, metering and collection can be brought to a point where private capital will finance the network without recurring federal intervention.
