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Power sector reform has become an issue in the past few years. The key motivations are to achieve better service, reliable operation, and competitive rates. However, the restructuring of electric utilities in a depressed economy like Nigeria has introduced a number of new opportunities and challenges. The opportunities include simulation of indigenous technological development, creation of job for teaming graduates. More importantly the cost of doing business in Nigeria is bound to go down with better returns to investors and opening up new areas of manufacturing that once seemed unattractive for investors as a result of new reliance on uninterrupted power supply. The challenges are many and some of them include uncertainty in continuity of energy policies, politicising of the energy and power sector, Lack of local contents and weak indigenous private sector participations. Others are poverty and customers' inability to pay an economic and appropriate electricity tariff, uneven geographical locations of power generation plants, youth restiveness, compensation extortion, and vandalisation of gas pipelines, restricted primary energy sources and insufficient transmission line capabilities. These challenges require urgent solutions to facilitate the transition from regulated market to new deregulated market. The result of the study would be of guidance to power system engineers and managers, energy policy makers, and the governments of nations involved in the power system reforms and effective planning.