How the sale of Transmission Company of Nigeria impacts the country’s electricity value chain

The dynamics of Nigeria's electricity value chain are set to undergo significant changes as plans to unbundle and sell the Transmission Company of Nigeria are underway. The sale of the Transmission Company of Nigeria, which has long been considered a weak link in the country's power sector, is expected to bring about a much-needed injection of private sector discipline and investor confidence. George Etomi, Director of the Eko Electricity Distribution Company, sheds light on the implications of this move and the broader energy transition in Nigeria. The privatization of the transmission company has been on the agenda for some time, with the understanding that without addressing this crucial component, the value chain would remain vulnerable. Despite previous attempts to secure a concessionaire and later a manager for the company, the transmission sector has continued to lag behind, affecting the overall efficiency of the power sector. By unbundling and privatizing this segment, Nigeria aims to align it with the standards of the other privatized entities, which could lead to improved operational efficiency and stability. Moreover, the $10 billion energy transition project announced by the president underscores Nigeria's focus on harnessing its vast gas resources for domestic utilization. With a greater emphasis on gas, the country aims to reduce its carbon footprint while ensuring energy security. However, the transition to cleaner energy sources remains a formidable challenge for many developing countries, including Nigeria, as significant investments and global cooperation are necessary to achieve emission reduction targets. In light of the World Bank report on the energy sector in Nigeria, policymakers face the task of addressing key issues such as foreign exchange distortions and aligning the various components of the value chain. The report underscores the importance of harmonizing policies and improving infrastructure to enhance the efficiency and competitiveness of the power sector. By heeding the recommendations of international institutions like the World Bank, Nigeria can strengthen its energy infrastructure and pave the way for economic diversification. Overall, the unbundling and sale of the Transmission Company of Nigeria represent a pivotal moment in Nigeria's electricity value chain, signaling a shift towards greater private sector participation and enhanced operational standards. As the country navigates its energy transition and addresses key sector challenges, collaboration with international partners and strategic reforms will be essential to secure a sustainable and resilient energy sector for the future.