Every few months, the same tired headline resurfaces: Benin, Togo, and Niger owe Nigeria billions for electricity. This quarter, it’s 17.45 billion naira. The story triggers predictable outrage—why are we lighting up our neighbors while our own people sit in darkness? It makes for a good headline. But the truth is far less dramatic, and far more hopeful.
The payment risk implied by that figure was resolved years ago. In 2017 and 2019, Nigeria’s Eligible Customer and Willing Buyer, Willing Seller reforms moved cross-border electricity supply onto direct, guaranteed bilateral contracts. Neighboring utilities now post letters of credit or bank guarantees before a single megawatt flows. This trade runs on surplus capacity, not power diverted from Nigerian homes, and is capped at less than 10 percent of grid supply. The 17.45 billion naira isn’t a debt for electricity itself. It’s a residual service charge—the regulated fee covering the regulator, transmission company, and market operator. The actual energy payments, which are larger, are settled separately under those guaranteed contracts and are fully secured. The service charge is the one layer not yet behind a guarantee, and even that is being fixed.
This model works. On a single day in June, 228 megawatts flowed directly from generators to Nigerian factories—steel mills, food processors, and manufacturers—under the same disciplined bilateral contracts. Those customers pay, they get reliable power, and they bypass the collection weaknesses of the distribution network. It’s the healthiest part of the entire system.
The real opportunity is to scale this commercial model. Nigeria can expand contract-backed supply both on the grid and off it, starting with agro-processing zones, staple-crop clusters, and commercial hubs—dense, creditworthy loads that can carry guarantee-backed contracts today. Every megawatt sold this way is a megawatt actually paid for, driving industrial output and jobs.
The same logic applies to the domestic market. Most of the 6.8 trillion naira owed to generators sits in the distribution-to-generation relationship. The regulator’s 2024 move to bilateral trading is pulling generators and distributors onto direct, guarantee-backed contracts. Fewer than a third of grid generators had such contracts by mid-2024; the rest were still supplying on trust, which is how debt builds. Finishing that transition would close the single biggest hole in the system.
None of this excuses the losses inside Nigeria’s own network. On June 28, 399 megawatts were lost in the grid before reaching any customer. Downstream, distribution and collection losses of 30 to 40 percent cost distributors hundreds of billions of naira each quarter. Metering, reinforcing transmission corridors, and tackling vandalism and theft are essential. Every recovered megawatt is the cheapest power in the country.
But let’s retire the annual ritual of outrage over 17.45 billion naira. It’s a modest service charge on a trade Nigeria disciplined years ago, not evidence of neighbors fleecing us. The more useful truth is that Nigeria already has a model that works: direct, guaranteed, bilateral contracts proven with international customers and domestic industry. The job now is to scale that model into our cities and zones, extend it across the value chain, and keep closing leaks at home. The people running this sector are already on that road. What they need is for us to help them move faster—not to keep relitigating a debt settled, by design, a long time ago.
