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From Isaac Anumihe, Abuja
The Federal Government has brought attention to Nigeria’s power sector’s persistent liquidity shortfalls and under-recovery by the distribution companies (DisCos).
Speaking at the fifth edition of Power Correspondents Association of Nigeria (PCAN) in Abuja, the Managing Director and Chief Executive Officer (CEO) of Nigeria Independent System Operator (NISO), Engineer Abdu Mohammed, also expressed concern for the inadequate investment in infrastructure and weak supply reliability that often undermines consumers’ willingness to pay.
While the tariff framework provides a transparent methodology based on key variables such as exchange rate, inflation, and gas price, political and social considerations have often led to tariffs that remain below actual cost levels, he said.
Mohammed, who also represented the Managing Director of Mainstream Energy Solutions, further stated that the power sector struggles to attract investment, sustain operations, and deliver the level of service that Nigerians rightly expect.
“But beyond the economics lies a deeper issue the enduring challenge of energy poverty. Millions of households in Nigeria still lack access to reliable electricity. For many, connection to the grid does not guarantee supply, and for others, the cost of energy remains beyond reach. Energy poverty is not just about a lack of connection, it is about the inability to afford sufficient power for daily life and productive enterprise. It is about children unable to study at night, small businesses unable to grow, and industries forced to rely on costly alternatives.
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“We cannot ignore the fact that rising inflation, unemployment, and declining purchasing power have eroded the capacity of many Nigerians to pay higher tariffs, even when supply improves. And yet, without cost-reflective tariffs, our utilities cannot recover costs, investors cannot commit capital, and our electricity infrastructure will continue to deteriorate. The real question, therefore, is not whether we should have cost-reflective tariffs, but how to achieve them in a way that preserves affordability and protects the most vulnerable among us,” he said.
In his welcome remarks, Chairman of PCAN, Mr. Obas Esiedesa, is worried that the sector is overburdened by debts amounting to over ₦6 trillion, a situation that threatens investment into the industry.
“The industry is still weighed down by an estimated ₦6 trillion debt owed by the Federal Government to power generation companies, a massive liquidity gap across the value chain, gas supply shortages, aging and weak transmission infrastructure, and rising foreign exchange costs that threaten investments and operations.
“While operators demand cost-reflective tariffs as a condition for viability, millions of Nigerians continue to live in darkness or rely on expensive self-generation. According to the World Bank, about 85 million Nigerians, roughly 43 per cent of our population, still lack access to grid electricity, making Nigeria home to the largest electricity access deficit in the world. This statistic is not just a number, it is a stark reminder of the scale of our national challenge and the urgency of reform,” the chairman noted.
