Nigerian electrical energy firms are in need of an estimated N2 trillion ($2.5 billion) in capital and want new buyers to revive the trade, which may barely present energy to its 200 million residents.
Energy firms in Nigeria are over-leveraged and undercapitalized, which has restricted their potential to put money into distributing electrical energy to households, Olu Verheijen, an adviser to President Bola Tinubu on vitality, stated in an interview, Bloomberg reported Thursday.
Nigeria generates and provides between 3,500 MW and 4,500 MW to the tens of millions of residents within the 36 states and the Federal Capital Territory. For instance, on Thursday, the nation's electrical energy era stood at 4,582.49 MW as of 6 a.m.
Insufficient costs, patchy income assortment and a dilapidated nationwide electrical energy grid have compelled most residents of Africa's most populous nation to generate vitality from noisy mills.
Take the case of Lagos. The electrical energy grid provides just one,000 MW to a metropolis of 25 million inhabitants. In distinction, Shanghai, with roughly the identical inhabitants, offers greater than 30,000 MW at peak demand.
“We have to set up insurance policies that facilitate reorganization and recapitalization and usher in new companions with new capital,” the adviser stated, with out giving a date or extra particulars for the plan.
President Bola Tinubu promised on January 1, 2024 to enhance electrical energy provide within the West African nation.
The recapitalization will likely be accompanied by plans to make electrical energy charges cost-reflective, which can enhance the liquidity and viability of the vitality sector, Verheijen stated.
Whereas the nation privatized era and distribution in 2013, tariffs are set by the Nigeria Electrical energy Regulatory Fee, a government-controlled physique.
Vitality firms will not be allowed to cost sufficient to recoup the prices of distributing electrical energy, with the federal government paying the distinction as a subsidy to firms within the sector.
With out tariff revision, the weak spot of the naira – which fell 50 p.c towards the greenback final yr – and rising inflation might push energy subsidies to N1.6 trillion this yr from N600 billion in 2023, the regulator stated.
