Power firms need $2.5bn new capital

Nigeria’s electricity sector is grappling with a severe capital shortfall, estimated at around N2 trillion ($2.5 billion), highlighting the urgent need for new investments to revitalize an industry crucial for the country’s 200 million residents.NYSC Portal

According to Olu Verheijen, an adviser to President Bola Tinubu on energy, the power companies in Nigeria are over-leveraged and under-capitalized, severely limiting their ability to distribute electricity efficiently to households. This information was reported by Bloomberg.JAMB Portal

The country’s power generation fluctuates between 3,500MW and 4,500MW, which is significantly inadequate for its vast population spread across 36 states and the Federal Capital Territory. For instance, on a given day, the national grid was only able to generate 4,582.49MW.

Read Other News:

This shortfall in power generation is compounded by issues such as inadequate pricing, inconsistent revenue collection, and a deteriorating national grid. Consequently, many residents resort to using personal generators, often leading to noise pollution and additional expenses.InformationGuideNigeria

The situation in Lagos, Nigeria’s most populous city, starkly illustrates the issue. The city, with a population of around 25 million, receives only about 1,000MW from the grid. This figure is starkly contrasted with cities like Shanghai, which, with a similar population size, can supply over 30,000MW at peak demand.

Verheijen suggests that policy reorganization and recapitalization are necessary steps, along with bringing in new partners who can provide fresh capital. However, specific details or timelines for these plans were not provided.

One of the key strategies for sector revitalization includes making electricity tariffs cost-reflective, which would enhance the liquidity and viability of the power sector. Since the privatization of generation and distribution in 2013, electricity tariffs in Nigeria have been regulated by the Nigeria Electricity Regulatory Commission, a government-controlled entity. The current tariff structure does not allow power firms to recover the cost of electricity distribution, leading to the government subsidizing the difference.JAMB Result

However, due to the weakening of the naira and rising inflation, energy subsidies are projected to increase significantly, potentially reaching N1.6 trillion this year, up from N600 billion in 2023.

Check JAMB Result

Check and Confirm: How much is Dollar to Naira