Nigeria’s electricity sector has long struggled with the paradox of huge investments in power infrastructure but persistent shortages in electricity supply. While billions of dollars have been spent building generation plants and transmission facilities over the past two decades, the country still produces far less electricity than its installed capacity suggests.
To address this challenge, the Federal Government is proposing a new commercial vehicle known as the Grid Asset Management Company Limited. The initiative is designed to unlock stranded generation capacity, improve transmission infrastructure and increase electricity delivered to the national grid without immediately constructing new power plants.
Industry experts say the proposal, if successfully implemented, could help recover up to 1,600 megawatts of electricity from existing but underutilised power assets.
Grid Asset Management Company Limited may unlock 1,600MW of stranded power
The proposed Grid Asset Management Company Limited is part of the Federal Government’s broader strategy to revitalise Nigeria’s power sector and address the persistent gap between installed generation capacity and actual electricity supply.
Nigeria currently has an installed generation capacity estimated at more than 13,000 megawatts, yet the power delivered to the national grid often fluctuates between 3,500MW and 5,000MW. This gap is largely attributed to gas supply constraints, transmission bottlenecks, poor infrastructure maintenance and weak commercial structures within the electricity market.
According to government officials, the Grid Asset Management Company Limited is expected to tackle these structural issues by focusing on optimising existing assets rather than building entirely new infrastructure.
The proposal was announced following approval by the Federal Executive Council, which authorised the establishment of the company as part of efforts to strengthen electricity generation and transmission capacity across the country.
President Bola Tinubu subsequently inaugurated an 11-member committee to oversee the incorporation and operational framework of the new entity.
Committee to design operational framework
The committee responsible for implementing the proposal is chaired by the President’s Chief of Staff, Femi Gbajabiamila.
Other members include the Minister of Power, Adebayo Adelabu; the Attorney-General of the Federation, Lateef Fagbemi; the Minister of Finance, Wale Edun; and the Minister of Works, David Umahi, among others.
The committee is tasked with reviewing existing laws, policies and institutional frameworks governing Nigeria’s electricity sector. This includes evaluating how the Grid Asset Management Company Limited will interact with existing regulatory and operational institutions within the power value chain.
Officials say the review will also assess the legal and financial implications of the initiative, including subsidy exposure, revenue frameworks and market liquidity.
Recovering stranded electricity assets
A major objective of the Grid Asset Management Company Limited is to recover underutilised generation capacity from power plants built under the National Integrated Power Project.
These government-funded projects were developed in the mid-2000s to address Nigeria’s chronic electricity shortage. However, many of the plants have struggled with operational challenges such as gas supply disruptions, maintenance issues and limited transmission capacity.
As a result, several plants operate significantly below their installed capacity despite the massive investments made in their construction.
The proposed company will therefore focus on transforming these assets into commercially viable projects capable of attracting private investment and delivering reliable electricity to the grid.
Benin–Lagos corridor pilot project
The first phase of the initiative will focus on the Benin–Lagos transmission corridor, one of the most economically significant electricity routes in the country.
This corridor supplies electricity to key industrial and commercial centres in southwestern Nigeria, including the states of Lagos and Ogun, where energy demand is particularly high.
The pilot project will focus on three major power plants built under the National Integrated Power Project: the Omotosho Power Plant in Ondo State, the Olorunsogo Power Plant in Ogun State and the Ihovbor Power Plant in Edo State.
Combined, these facilities have an installed capacity of about 1,775 megawatts. However, much of this capacity currently remains underutilised due to technical and commercial constraints.
Through improved maintenance, reliable gas supply agreements and strengthened transmission infrastructure, the government believes the Grid Asset Management Company Limited could recover as much as 1,600MW within the next two years.
Energy analysts say such an increase would represent a significant boost to Nigeria’s electricity supply if achieved.
New transmission model for power evacuation
Another critical component of the proposal involves strengthening transmission infrastructure, which has historically been one of the weakest links in Nigeria’s electricity value chain.
Under the initiative, a new high-capacity transmission corridor is expected to be developed along the Benin–Lagos axis.
The proposed transmission line will operate as an open-access network capable of evacuating electricity from multiple power plants rather than relying on dedicated lines connected to individual generators.
Experts say this model could improve grid flexibility and reduce the risk of power plants shutting down due to transmission failures.
By strengthening evacuation capacity, the Grid Asset Management Company Limited could enable existing plants to deliver more electricity to consumers without the need for immediate expansion in generation infrastructure.
Financing without sovereign borrowing
A key feature of the initiative is its financing structure. Instead of relying heavily on government borrowing, the proposed company will adopt a project finance model designed to attract private sector participation.
Under this structure, each infrastructure project developed by the Grid Asset Management Company Limited will have its own revenue stream, making it easier for investors to finance them based on projected cash flows.
Officials say this approach could mobilise funding from domestic and international investors while reducing pressure on Nigeria’s public finances.
The initiative is expected to receive institutional support from the power team of the Renewed Hope Infrastructure Development Fund.
Potential benefits and concerns
If successfully implemented, the government believes the Grid Asset Management Company Limited could help increase electricity availability for households and businesses while reducing reliance on diesel generators.
Improved power supply could also boost productivity for manufacturers, support small and medium enterprises and lower energy costs across key sectors of the economy.
However, some analysts have raised concerns about potential overlaps with existing institutions such as the Niger Delta Power Holding Company and the Transmission Company of Nigeria.
Energy experts argue that careful coordination will be necessary to ensure the new company complements rather than duplicates the responsibilities of existing organisations.
Despite these concerns, proponents believe the concept could offer a practical solution to Nigeria’s long-standing electricity challenges by prioritising the recovery of stranded assets instead of focusing solely on building new power plants.
