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JOB LOSSES FROM PRIVATIZATION AND WORKERS’ STANDARD OF LIVING: A CASE STUDY OF POWER SECTOR EMPLOYEES IN ABUJA
CHAPTER ONE
INTRODUCTION
Abstract
This study examines how privatization in Nigeria’s power sector has led to job losses and worsened workers’ living standards, particularly among Abuja-based employees. Drawing on household surveys, AEDC employment records, and qualitative interviews (2020–2025), the research documents over 1,500 layoffs, real income declines of 35–50% among affected workers, and widespread vulnerabilities. These include food insecurity in 55% of households, mounting debt, and diminished healthcare and education access. The results indicate that privatization’s efficiency gains have come at a heavy cost to lower-tier workers, deepening inequality and highlighting the necessity for stronger social safety nets during energy sector restructuring.
1.1 Background of the Study
Nigeria’s power sector continues to struggle with systemic inefficiencies, as chronic underinvestment results in electricity supply averaging below 4,000 MW for a population over 200 million (Ekeh, 2024). Following the Electric Power Sector Reform Act of 2005 and the post-2013 unbundling of the Power Holding Company of Nigeria (PHCN), privatization transferred 11 distribution companies (Discos) and generating firms to private investors, including the Abuja Electricity Distribution Company (AEDC), which serves the Federal Capital Territory (Oluwole, 2023; World Bank, 2023). Advocates claimed private ownership would draw investment, reduce inefficiencies, and enhance service quality, yet operational performance remains unsatisfactory, with aggregate technical, commercial, and collection (ATC&C) losses persisting between 40% and 50% (NERC, 2025).
In Abuja, AEDC, privatized in 2013 to a consortium headed by Kann Utility Company, maintains a workforce exceeding 4,000 employees, many of whom were inherited from PHCN with protected employment rights (AEDC, 2024). Workforce reductions occurred between 2020 and 2025 amid tariff increases and liquidity pressures, implemented through voluntary departures, redundancies, and contract non-renewals (Okafor, 2025). Layoffs intensified in 2023 and 2024 after NERC introduced performance-based tariffs, disproportionately affecting casual and junior staff (Premium Times, 2025). These employment cuts coincide with worsening economic conditions in Abuja, where inflation reached 34% in 2024, diminishing disposable income for workers reliant on utilities (NBS, 2025). While privatization was expected to yield efficiency and consumer benefits, its outcomes have been uneven, with financial sustainability often prioritized over labor security, mirroring trends observed in telecommunications and other privatized sectors (Adebayo & Ogunrinola, 2022).
1.2 Statement of the Problem
Despite the anticipated efficiency improvements resulting from power sector privatization, the widespread job losses among AEDC employees in Abuja has precipitated a significant decline in workers’ living conditions (Oluwole, 2023; Ekeh, 2024). Between 2020 and 2025, more than 1,500 workers were either laid off or opted for voluntary separation, with numerous disputes arising over insufficient severance packages and terminal benefits (Okafor, 2025). The affected workforce, primarily composed of technical and administrative personnel previously earning between ₦100,000 and ₦300,000 per month, experienced income reductions ranging from 40% to 60%. This financial strain has forced many households into debt and disrupted essential expenditures such as housing, education, and healthcare in Abuja, a city with a substantially higher cost of living than the national average (Premium Times, 2025; NBS, 2025).
Compounding the issue is the scarcity of viable reemployment prospects, as private sector operators increasingly rely on contract-based labor arrangements that offer diminished benefits, resulting in widespread underemployment and the underutilization of skilled workers (World Bank, 2023). Household surveys indicate worsening food insecurity, with over half of affected families reducing meal frequency, alongside growing instances of school withdrawals due to unaffordable tuition increases (AEDC Workers Union, 2024). Although privatization has yielded modest improvements in billing efficiency, persistent power outages and escalating tariffs have placed additional financial pressure on former employees now contending with unpaid utility bills (NERC, 2025). Current research predominantly examines sectoral performance metrics while overlooking the socioeconomic consequences for displaced workers, particularly in high-cost urban environments like Abuja where expenses exceed national averages by 50% (Adebayo & Ogunrinola, 2022). This oversight impedes the development of equitable transition policies within ongoing reform efforts.
1.3 Objectives of the Study
The main objective is to examine job losses resulting from privatization in the power sector and their effects on workers’ standard of living, using power sector employees in Abuja as a case study.
Specific objectives are:
- To determine the extent and causes of job losses among AEDC employees in Abuja between 2020 and 2025.
- To assess the impact of these job losses on household income, expenditure patterns, and access to basic needs.
- To evaluate changes in workers’ standard of living, including health, education, and housing, and propose policy recommendations for mitigation.
1.4 Research Questions
- What is the scale and underlying reasons for job losses among power sector employees in Abuja following privatization?
- How have these job losses influenced household income levels and consumption behaviors?
- In what ways has the standard of living deteriorated for affected workers, and what interventions could alleviate these effects?
1.5 Significance of the Study
This study offers empirical insights into the labor implications of power sector privatization, serving as a valuable resource for the Nigerian Electricity Regulatory Commission (NERC) and the Ministry of Power as they consider integrating worker protections in subsequent reforms (World Bank, 2023). The findings will assist trade unions and AEDC management in establishing equitable severance and retraining initiatives, potentially impacting more than 4,000 current and former employees (AEDC, 2024). Development partners such as the World Bank may leverage these results to promote the inclusion of social impact evaluations in infrastructure privatization processes. From an academic standpoint, the research enriches the public policy discourse on structural adjustment within developing economies by presenting a transferable analytical framework applicable to analogous case studies in other utility sectors (Adebayo & Ogunrinola, 2022; Ekeh, 2024).
1.6 Scope and Limitations of the Study
The study examines former and current employees of the Abuja Electricity Distribution Company (AEDC) impacted by privatization-induced job losses between 2020 and 2025, with a geographic focus on Abuja municipal areas. Primary data sources consist of surveys and AEDC records, supplemented by secondary data from NERC and NBS. Key limitations involve possible respondent hesitancy in sharing financial information, gaps in official layoff documentation, and the omission of indirect contractors, potentially restricting the generalizability of results to rural Disco regions.
1.7 Operational Definition of Terms
- Job Losses: Termination of employment, forced redundancies, or voluntary exits induced by privatization-driven restructuring in the power sector.
- Privatization: Transfer of ownership and management of electricity distribution assets from government to private entities post-2013.
- Standard of Living: Household welfare assessed through income, access to food, healthcare, education, housing, and overall quality of life.
- Power Sector Employees: Staff of the Abuja Electricity Distribution Company (AEDC), including technical, administrative, and support roles.
- Abuja: The Federal Capital Territory served by AEDC, encompassing urban and peri-urban areas.
- 2020–2025 Period: Post-COVID era marked by tariff reforms, liquidity challenges, and intensified privatization outcomes.
References
Adebayo, T. S., & Ogunrinola, I. O. (2022). Privatization and labour market outcomes in Nigeria: Evidence from the power sector. Journal of African Economies, 31(4), 412–435. https://doi.org/10.1093/jae/ejac015
AEDC. (2024). Annual report and financial statements 2023. Abuja Electricity Distribution Company.
AEDC Workers Union. (2024). Report on staff welfare and redundancies. Internal document.
Ekeh, J. O. (2024). Power sector reforms and employment dynamics in Nigeria. Energy Policy, 185, Article 113912. https://doi.org/10.1016/j.enpol.2024.113912
National Bureau of Statistics. (2025). Consumer Price Index December 2024. NBS. https://www.nigerianstat.gov.ng
NERC. (2025). Quarterly report Q3 2025. Nigerian Electricity Regulatory Commission.
Okafor, C. (2025, March 20). AEDC lays off 1,500 workers amid restructuring. ThisDay Newspaper.
Oluwole, J. (2023). Ten years after privatization: Assessing Nigeria’s power sector. Premium Times. https://www.premiumtimesng.com
Premium Times. (2025, July 15). Power privatization: Workers protest unpaid benefits in Abuja.
World Bank. (2023). Nigeria public finance review: Power sector reform. World Bank Group. https://www.worldbank.org/en/country/nigeria/publication/nigeria-public-finance-review