As Nigeria marks 65 years of independence, stakeholders in the power sector have voiced concerns over ongoing financial challenges affecting the country’s electricity value chain, urging the government to intervene.

In an interview in Lagos on Tuesday, they highlighted liquidity constraints as the main barrier to delivering stable and reliable power to millions of Nigerians, according Supreme News.

The Group Managing Director of Sahara Power Group, Dr. Kola Adesina, described the sector as being in a state of chronic financial insolvency.

He stated that power generation companies and gas suppliers are collectively owed more than N4 trillion.

“Only about 35 per cent of monthly invoices are paid, leaving stranded capacity and stifling both maintenance and fuel supply,” he lamented.

Adesina also pointed to non-cost-reflective tariffs as a key structural weakness in the sector.

He explained that although the April 2024 Band A tariff hike—from N66 to N225/kWh—helped narrow the cost-recovery gap for high-end users, it sparked political backlash and created regulatory uncertainty.

“Partial rollbacks have only deepened policy instability.

“Meanwhile, transmission constraints and grid instability remain persistent problems.

“Despite installed generation capacity, Nigeria’s wheeling capacity lags far behind, resulting in frequent system collapses.

“Aging infrastructure, limited SCADA coverage, and vandalism further compound the crisis,” he said.

Adesina warned of misalignments in the gas-to-power chain, highlighting irregular payments, pipeline bottlenecks, and foreign exchange risks that constrain gas supply to thermal power plants.

“Contractual disconnects between Gas Supply Agreements and Power Purchase Agreements only worsen the situation. It all circles back to liquidity,” he emphasized.

He noted that the Electricity Act 2023, which decentralises power sector responsibilities to the states, offers both opportunities and potential risks.

“Decentralisation can foster healthy competition. But without a unified regulatory framework, we risk dangerous fragmentation that could derail market stability,” he added.

To tackle the persistent crisis in Nigeria’s power sector, Adesina called for immediate reforms.

He proposed addressing legacy debts owed to GenCos and gas suppliers by securitising them through a time-bound bond programme linked to better metering and lower system losses.

He further recommended strict enforcement of tariff discipline under the MYTO framework, targeted subsidies for low-income consumers, and government guarantees for foreign-exchange-indexed gas payments.

Meanwhile, the Chairman of the Customer Consultative Forum for Festac and Satellite Town, Dr. Olukayode Akinrolabu, acknowledged that electricity reforms under President Bola Tinubu’s administration have achieved some progress, but significant challenges persist.

He noted that Nigeria’s functional power generation capacity rarely exceeds 4,000 megawatts—far below what is needed to meet the country’s energy demands.

“One of the most pressing issues is the persistent inadequate generation capacity.

“In spite of reforms, the sector continues to fall short of expectations,” he said.

Akinrolabu also pointed to grid instability, noting that the national grid experienced more than 10 partial or total collapses in 2023 and 2024 alone.

He lamented the persistent metering gap, with an estimated 6.2 million customers still unmetered, resulting in widespread estimated billing, loss of consumer trust, and revenue shortfalls for Distribution Companies.

He added that the Transmission Company of Nigeria struggles to deliver power efficiently from GenCos to end-users, citing frequent disruptions caused by vandalism and inadequate funding for gas infrastructure.

“Much of the transmission and distribution network is obsolete and dilapidated, contributing to high technical losses and continued grid instability,” he noted.

According to him, DisCos and GenCos are under severe financial pressure due to low tariff recovery, widespread electricity theft, and weak liquidity.

He also warned that inconsistent policies and regulatory uncertainty continue to discourage investors.

“Without a stable regulatory environment, investor confidence will remain low, and the sector will continue to suffer,” he stated.

Electricity market analyst Mr. Lanre Elatuyi emphasized the urgent need for clear and consistent policies to attract private sector investment into Nigeria’s power industry.

He noted that investors require a fair regulatory environment, legal protections, and assurances that the government will honour its financial obligations.

Elatuyi expressed concern over the growing debt owed by government ministries, departments, and agencies, calling it a red flag for the sector.

He also lamented the lack of strict penalties for energy theft, identifying it as another factor that undermines investor confidence.

“We must treat the power sector as an integrated whole, understanding that each segment has distinct goals but ultimately must work together for reliable and affordable electricity,” he said.