In response to the increase in Nigeria’s demographic figures over the decades which is put at about 160 Million and the lack of commensurate increase in energy supply to meet the country’s growing economic and infrastructural development objective, the Federal Government of Nigeria realized that there was the need to break up defunct National Electric Power Authority (NEPA) into small, effective units, as adequate and efficient electric power is a major factor in modern industrial development.
The unbundling of NEPA started when President Olusegun Obasanjo signed into law the Electric Power Sector Reform Act (EPSR Act) which led to the formation of the Power Holding Company of Nigeria (PHCN) with a transitory framework in March 2005. By this act, NEPA was unbundled into 18 companies: Six Generation Companies, One Transmission Company, and Eleven Distribution Companies. All were issued Operations Licenses.