Funding provisions by policy makers are usually for two main purposes including poverty and inequality reduction as well as improvement of the situation for private sector growth. Nigeria returned to civilian rule in 1999 and has since been pursuing private sector-led growth and development and one of the sectors constituting the focus of the federal government is the energy sector especially the electricity sub-sector. This study analysed federal government spending on the energy sector with special emphasis on the electricity sub-sector to see how this spending has impacted on production, transmission and distribution of electricity using descriptive statistics. The study found that despite the significant reforms and increase in spending in the sector, the outcome in terms of its reflection on production, transmission and distribution of electricity is far from the realisation of the reform objectives. The country lags behind other countries like Libya, Kenya and Ghana in per capita power production and consumption and this lack of access to electric power, and modern energy in general has a negative effect on productivity and has limited the economic opportunities available to Nigeria. The study recommended going back to the NEEDS policy thrust and targets in the power sector and must pay attention to the environmental consequences of various options for enhancing the provision of energy services.