Nigeria must raise power investment to $10bn yearly to

Nigeria will need to increase annual investment in its electricity sector from the current level of about $1 billion to at least $10 billion if it hopes to deliver reliable electricity, achieve universal access and provide enough power to drive industrial growth, the Special Adviser to the President on Power Infrastructure, Sadiq Wanka, has said.

Speaking at Asharami Square 3.0, organised by Sahara Group in Lagos on Wednesday, Wanka said while Nigeria’s power deficit remains daunting, experiences from countries such as India and South Africa show that the gap can be closed within a decade if the right reforms and investments are sustained.

According to him, Nigeria’s greatest challenge is no longer the absence of opportunities but its inability to attract the scale of capital required to transform the electricity value chain.

“Today, we invest roughly $1 billion annually across generation, transmission and distribution. If we are serious about achieving universal electricity access and providing sufficient power for industries, we have to increase that investment almost ten-fold,” he said.

Wanka explained that the investment estimate was derived from the Integrated Resource Plan developed for the power sector in 2024 which projects Nigeria’s electricity demand up to 2045 using a least-cost planning approach.

He said one of the most striking findings of the plan, is that about 80 per cent of Nigeria’s installed electricity capacity by 2045 is expected to come from renewable energy, particularly solar and hydropower.

He stressed that the projection was driven not by climate considerations but by economics.

“The analysis was based on what delivers electricity at the lowest cost. Renewable energy emerged as the cheapest option for Nigeria’s future electricity mix,” he said.

While acknowledging persistent structural challenges in the sector, Wanka argued that significant reforms introduced by the Tinubu administration have begun creating a more attractive environment for investors.

He cited the Electricity Act 2023, which decentralised electricity regulation by empowering states to establish their own electricity markets and regulatory agencies.

According to him, several states have already begun leveraging the new law to attract investments into electricity infrastructure through public-private partnerships and distribution projects.

He pointed to initiatives in states such as Imo, Kano and Katsina, where governments are partnering with private investors to strengthen electricity infrastructure and improve supply.

On concerns over the financial viability of Nigeria’s electricity market, Wanka acknowledged the longstanding problem of inadequate payments within the value chain but maintained that market discipline has improved considerably in recent years.

He said apart from a few distribution companies, most electricity distribution firms are now substantially meeting their market settlement obligations.

He also reiterated that the Federal Government remains committed to migrating the entire electricity market to cost-reflective tariffs, although the transition would be carefully implemented to protect vulnerable consumers.

According to him, the migration of Band A customers to cost-reflective tariffs marked the beginning of that journey, with broader implementation expected over time.

“It is official government policy that the entire sector will eventually transition to cost-reflective tariffs, while ensuring adequate protection for vulnerable households,” he said.

Wanka challenged the widespread narrative that Nigeria’s electricity crisis is solely the result of the 2013 power sector privatisation.

While admitting that some investors lacked the financial and technical capacity to manage distribution companies, he explained that ownership of most distribution companies has since changed hands without delivering the expected turnaround.

“If eight of the original distribution companies have changed ownership, why has the narrative remained the same? That tells us there are deeper structural issues beyond ownership,” he said.

He urged investors to look beyond the sector’s perceived weaknesses, arguing that reforms now provide opportunities to structure investments in ways that minimise exposure to market risks.

According to him, embedded generation projects, interconnected mini-grids and ring-fenced electricity networks allow investors to generate stable returns without depending entirely on the wider national electricity market.

He cited examples where industrial clusters and communities negotiate directly with power developers, allowing tariffs to reflect actual costs while ensuring reliable service delivery.

He also highlighted Nigeria’s off-grid expansion programme as one of the country’s biggest power sector success stories.