Power down
Nigeria’s electricity generation has dropped by 37 percent to 2,649.9 megawatts from 4,207.05 MW. This comes as the Nigerian Gas…
Nigeria’s electricity generation has dropped by 37 percent to 2,649.9 megawatts from 4,207.05 MW. This comes as the Nigerian Gas Association (NGA) backs President Bola Tinubu to focus on Autogas amid the petrol subsidy removal. According to the Vanguard, the situation is due to the poor state of plants and the low gas supply to thermal plants. Electricity prices in Nigeria are expected to rise following the unification of the naira, which has led to its depreciation, with electricity tariff set to increase by over 40% starting from 1 July — a move which will likely end energy subsidies in the country.
The Buhari administration inherited a power sector on a path for growth and development despite a rocky regulatory and structural framework. It ended up reversing decades of gains. It failed to implement key aspects of the power sector reform plan, including consistently raising tariffs to a point where electricity subsidies were gone, and it failed to unbundle and privatise the Transmission Company of Nigeria, the only part of the value chain that remains in the government’s hands. What occurred is that the huge investments in generation capacity have turned to waste as power generated by the generation companies (GenCos) could not be transmitted to the distribution companies (DisCos) for sale to consumers. Both the GenCos and DisCos that took loans to invest in the sector are now crippled by bad debts and previous gains have largely been wiped out–in spite of the country’s 11 DisCos hitting a five-year revenue high mark of ₦842.42 billion in 2022. As Nigeria prepares for a 40% increase in electricity prices in July, the government must approach the sector with a value-for-money view. Critical investments in value chain items to ensure that generation, transmission and distribution provide this value for money are necessary to build the trust necessary for Nigerians, already burdened with an increased cost of living due to recent necessary policy pronouncements on fuel subsidies and foreign exchange.