An Economic Assessment of the Reform of Nigerian Electricity Market

There is no doubt that there is high level of inefficiency in the Nigerian Power sector. The power generation capacity available is far below the estimated growing demand for electricity. This paper therefore critically assessed the proposed reform of the electricity market in Nigeria. It highlighted some of the challenges such as severe electricity crisis due to the appalling state of power infrastructures, double digit transmission losses and low tariffs. An empirical investigation was conducted using a Linear Programming optimization model via General Algebraic Modelling System (GAMS) to analyse the pre and post electricity reform era. The paper concludes that the reform would be beneficial to the country. Albeit, the study identified that an upward review of prices and reduction in transmission losses are essential in incentivising investor but the success of the reform depends on government commitment and huge investment.