Debt, insufficient capital hampering DisCos operations – Verheijen

Nigerian electricity companies are said to be burdened with excessive debt and insufficient capital, constraining their ability to invest in expanding household electricity distribution in the country.

Special Adviser to President Bola Tinubu on Energy, Olusegun Verheijen who disclosed this also revealed that electricity firms would need about $2.5 billion to revive the industry and provide a steady power supply nationwide.

According to her, inadequate pricing, patchy revenue collection, and a dilapidated national grid have left most residents in Africa’s most populated nation to produce their power using noisy generators.

“We need to set policies that facilitate reorganization and recapitalization and bring in new partners with new capital.”

She 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.

Verheijen explained that in the bid to enhance the liquidity and sustainability of the power sector, there are plans to make electricity tariffs cost-reflective alongside the recapitalization.

According to her, if tariff adjustments are not implemented, the weakness in the Naira, which experienced a 50 per cent drop against the dollar in 2024 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.

Nigeria possesses a total installed capacity for electricity generation of 13,000 megawatts, yet only a fraction, specifically 4,000 megawatts, is effectively distributed to homes and businesses.

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