Nigerian electricity companies are short of an estimated 2 trillion naira ($2.5 billion) in capital and need new investors to revive the industry that can barely supply power to its 200 million residents.
The companies are over-leveraged and under-capitalized, which has limited their capacity to invest in distributing electricity to households, Olu Verheijen, an adviser to President Bola Tinubu on energy, said in an interview.
Inadequate pricing, patchy revenue collection and a dilapidated national grid have left most residents in Africa’s most populated nation to produce their own power using noisy generators. Take the case of Lagos. The grid delivers only 1,000 megawatts to a city of 25 million people. By contrast, Shanghai, with roughly the same population, supplies more than 30,000 megawatts at peak demand.
“We need to set policies that facilitate reorganization and recapitalization and bring in new partners with new capital,”
“With the current tight fiscal space, government’s ability to cover this shortfall is challenged,” Verheijen said. “These issues have exacerbated the financial-liquidity challenges in the sector.”
Only 4,000 megawatts of Nigeria’s 13,000 megawatts of installed capacity for electricity generation are distributed to homes and businesses.
In contrast, South Africa — with a population that’s a third the size of Nigeria’s and whose economy was crippled by almost-daily power cuts last year — has about 52,000 megawatts of capacity, three quarters of which comes from a debt-riddled state-owned utility running aged plants.
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