Nigeria’s power reform stalls as tariff politics, N4tr debt deepen sector’s crisis

Nigeria’s ambitious journey towards a reliable and efficient electricity sector, a reform agenda spanning decades, is once again caught in a debilitating gridlock. What promised brighter days now faces renewed strain, primarily due to a potent cocktail of tariff politics, deep-seated structural weaknesses, and a staggering N4 trillion debt.

At the heart of the current crisis lies the thorny issue of tariff politics. Electricity tariffs, often viewed through a populist lens, have become a political hot potato. The reluctance to implement cost-reflective tariffs, driven by public outcry and political considerations, starves the DisCos (distribution companies) and GenCos (generation companies) of the much-needed revenue to operate, maintain, and upgrade their infrastructure. This creates a vicious cycle: underpriced electricity leads to underinvestment, which in turn leads to poor service, further fueling public resistance to tariff hikes.

Compounding this challenge is the colossal N4 trillion debt burdening the sector. This massive financial overhang cripples the ability of players across the value chain to invest in critical infrastructure, procure necessary equipment, or even pay for gas supplies and other operational costs. It makes the sector a high-risk, low-return environment, scaring away potential investors who could otherwise inject fresh capital and expertise.

Beyond these immediate financial and political hurdles are the enduring structural weaknesses. These include dilapidated transmission and distribution networks, widespread metering gaps, energy theft, and a generally inefficient operational framework. These issues result in significant technical and commercial losses, meaning much of the power generated never actually reaches paying customers.

The cumulative effect is a nation still heavily reliant on expensive and polluting alternative power sources, hindering economic growth and perpetuating energy poverty for millions. Until these fundamental issues – especially the political will to implement sustainable tariff structures and resolve the monumental debt – are decisively addressed, Nigeria’s power reform agenda will continue to flicker rather than shine brightly.

Source: Original Article