President Bola Tinubu, speaking on Monday, expressed his concerns regarding the inadequacies of Nigeria’s power sector privatization, noting that it had fallen short of its intended goals.
Despite having been privatized a decade ago, the national grid now caters to just about 15 percent of the nation’s electricity demand.
He emphasized the need for the recapitalization of power distribution companies during a roundtable event for participants and stakeholders in the Nigeria Electricity Supply Industry.
Tinubu pointed out that preliminary analysis revealed that the distribution companies (Discos) were severely undercapitalized, to the tune of nearly N2 trillion. He also suggested a rebasing of Nigeria’s power tariffs.
He highlighted that over 90 million Nigerians still lack access to electricity, and a significant portion of the population relies on costly self-generation to meet their energy needs.
Furthermore, the President emphasized that the capacity of the national grid has not seen significant growth in the past decade, with it currently providing only around 4,000MW compared to the ambitious 40,000MW target set by the government prior to privatization.
He attributed the sector’s underperformance to well-known issues related to commercial, governance, and operational challenges.
Tinubu underscored the need to break the cycle of underperformance and underinvestment in the power sector.
He called for a concerted effort from all stakeholders to address commercial issues, make the sector more appealing for investment, and reevaluate tariffs to reflect the true costs and losses across the entire value chain.
In terms of governance, the President stressed the importance of creating an environment where underperforming entities do not hinder sector progress.
He proposed a reorganization and recapitalization process for the distribution companies, bringing in new partners and capital to rejuvenate this critical segment of the value chain.
