Victor EzejaEnergy adviser to President Bola Tinubu, Olu Verheijen, says Nigeria’s ailing power sector needs about $2.5 billion (N2 trillion) capital investment to revamp it.
More than six decades after Nigeria’s independence, the power sector is still bedeviled with challenges as it struggles to provide less than 5,000 megawatts of electricity for over 200 million people.
Experts have at different times called for a total overhaul of the policy and regulatory system in the sector coupled with substantial investment to replace obsolete infrastructure both in the generation, transmission and distribution subsectors.
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“Power companies in Nigeria are over-leveraged and under-capitalised,” Verheijen stated in an interview, stressing the necessity of policy reforms to attract new investors and bolster the sector’s capacity to provide electricity to households.
According to a report produced by the International Energy Agency in conjunction with the International Renewable Energy Agency, the United Nations Statistics Division, the World Bank, and the World Health Organisation in 2022, Nigeria has the lowest access to electricity globally, with about 92 million persons out of the country’s 200 million population lacking access to power
Despite Nigeria’s power generation capacity standing at 13,000MW, the transmission and distribution remain insufficient with output ranging from 3,500MW to 4,500MW across the country, leaving residents to rely on generators.
Verheijen underscored the urgency of instituting policies to facilitate the sector’s reorganisation, recapitalisation, and the inclusion of new partners with fresh capital, although specifics and timelines were not disclosed.
Tinubu’s pledge to enhance the nation’s electricity supply comes as authorities in the sector propose tariff adjustments.
Verheijen stressed that making tariffs cost-reflective would bolster the power sector’s liquidity and viability.
Despite the privatisation of generation and distribution in 2013, tariffs remain under government control, hampering firms’ ability to recover electricity distribution costs.
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Highlighting the financial burden that electricity subsidy imposes on the government, the Nigeria Electricity Regulatory Commission (NERC) has warned that given the currency depreciation and surging inflation, it may reach N1.6 trillion in 2024 from N600 billion projected for 2023.
The impending crisis necessitates swift action to attract investment, overhaul policies, and ensure a sustainable and reliable power supply for Nigeria’s burgeoning population.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
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