The federal government has said that electricity companies in Nigeria require at lease N2 trillion ($2.5 billion) in capital to revive the industry and provide a steady power supply nationwide.
Adviser to President Bola Tinubu on energy, Olu Verheijen, stated this in an interview, according to a report by Bloomberg.
She pointed out that Nigerian electricity firms are burdened with excessive debt and insufficient capital, constraining their ability to invest in expanding household electricity distribution, adding that inadequate pricing, patchy revenue collection, and a dilapidated national grid have left most residents in Nigeria to produce their power using noisy generators.
“We need to set policies that facilitate reorganisation and recapitalisation and bring in new partners with new capital.”
Olu Verheijen added that the grid in Lagos delivers only 1,000 megawatts to a city of 25 million people. By contrast, with roughly the same population, Shanghai supplies more than 30,000 megawatts at peak demand.
Speaking further, the presidential advised mentioned that there are plans to make electricity tariffs cost-reflective alongside the recapitalisation, a move that is expected to enhance the liquidity and sustainability of the power sector.
She added that if tariff adjustments are not implemented, the weakness in the Naira, which experienced a 50% drop against the dollar last year and escalating inflation, might drive energy subsidies up to N1.6 trillion in 2024.
“With the current tight fiscal space, the government’s ability to cover this shortfall is challenged.
“These issues have exacerbated the financial liquidity challenges in the sector,” Verheijen added.