The Federal Government will issue a N4 trillion bond to settle verified legacy debts in the Nigerian power sector to address longstanding challenges that have hindered power generation, transmission, and distribution in Nigeria, President Bola Ahmed Tinubu has revealed.
The President revealed this during his Democracy Day speech on Friday, during which he announced measures being taken by his government to bolster the country’s energy infrastructure and enhance electricity supply.
“The Presidential Power Sector Task Force had been empowered to increase the bond to settle financial commitments that have been a burden on operators in the electricity value chain for years,” Tinubu said.
He said that the power sector that he inherited in 2023 was marred by chronic generation deficits, unreliable gas supplies, inadequate transmission infrastructure, growing debts and a huge metering deficit.
“When we joined in 2023 the electricity sector was in a state of chronic generation deficits, unreliable gas supply and transmission infrastructure that was so fragile that it could not evacuate available generation,” the President said.
“Electricity distribution companies suffered from heavy losses in operations, a metering gap of more than four million customers, and the entire value chain was weighed down by the burden of accumulated debts,” he added.
“The outcome was a sector with less than 13,500 megawatts of installed capacity, less than 13,500 megawatts of transmission capacity, less than 13,500 megawatts of distribution capacity, and less than 13,500 megawatts of revenues to sustain itself,” Tinubu said.
The President said his administration was pursuing a series of reforms to reposition the sector for better performance and increased private sector participation.
“One of the critical measures was the Electricity Act that decentralised the sector and gave the state governments the power to generate, transmit and distribute electricity in their areas,” he said.
The law has been seen as a significant shift in the governance of electricity in Nigeria, creating opportunities for sub-national governments and private investors to build their own power projects and improve electricity access.
Tinubu also said the Presidential Power Sector Task Force (PPTF) was persistently working to address the metering problem and enhance revenue collection in the power sector.
The President also noted that the Rural Electrification Agency, with the assistance of the World Bank and the African Development Bank, has been able to increase access to electricity in underserved communities through off-grid and mini-grid solutions.
He says the intervention has provided electricity to rural settlements, universities, markets and healthcare facilities which were previously facing a challenge of access to reliable power.
The Rural Electrification Agency (REA) funded by the World Bank and African Development Bank (AfDB), has introduced off-grid and mini-grid power to underserved communities, universities, markets and hospitals.
Tinubu said that electricity was a fundamental right of citizens in a democratic society and assured the public that his government would continue to focus on investments and reforms to boost power supply across the country.
The President declared that electricity is a democratic dividend that ought to be given to every Nigerian and we are going to do that.
Legacy debts, inadequate transmission capacity, poor revenue collection and inadequate metering are long standing challenges that have been identified as major constraints in the growth of the power sector in Nigeria.
The proposed N4 trillion bond, if implemented, could help ease the market participants, enhance liquidity in the electricity value chain and create a stable investment climate, analysts say.
The President’s announcement follows the Federal Government’s efforts to push the economy forward, welcome investment and enhance ease of doing business, making reliable electricity supply a key priority.
Although the reforms have taken place over the years, millions of Nigerians are still battling with the irregularity of electricity, compelling businesses and households to heavily depend on other sources of energy like diesel and petrol powered generators.
Tinubu said that the sector could be put on a more sustainable trajectory through continued reform, targeted investments and better institutional coordination, which would ultimately lead to better power supply to homes and businesses throughout the country.