Electricity companies need capital investment and restructuring to improve power supply, Olu Verheijen, special adviser to President Bola Ahmed Tinubu on energy, has said.
Speaking in an interview, Verheijen said distribution companies (DisCos) were short of N2 trillion in capital and needed new investors to revive the industry.
Verheijen said the companies were over-leveraged and under-capitalized, which had limited their capacity to invest in the distribution of electricity to households.
She said inadequate pricing, patchy revenue collection and a dilapidated national grid had left most residents in Africa’s most populated nation to produce their power using generators.
Said Verheijen: “We need to set policies that facilitate reorganisation and recapitalisation and bring in new partners with new capital.
“The recapitalisation will accompany plans to make electricity tariffs cost-reflective, which will improve the liquidity and viability of the power sector”.
Verheijen said with no tariff review, a weak Naira as well as increasing inflation could push energy subsidies to N1.6 trillion.
Added he: “With the current tight fiscal space, government’s ability to cover this shortfall is challenged.
“These issues have exacerbated the financial-liquidity challenges in the sector”.
The Nigeria Electricity Regulatory Commission (NERC) in December 2023, said the government incurred a subsidy obligation of N204.59 billion in the third quarter (Q3) of 2023.
Meanwhile, the Transmission Company of Nigeria (TCN) says the country currently has the capacity to transmit 8,100 megawatts (MW) of about 13,000 megawatts (MW) generated electricity.
TCN said Nigeria was supposed to transmit about 15,000MW but could not meet this capacity due to weak and ageing infrastructure.
