Troubles deepen for electricity users as power output declines

Nigerians and businesses may face ongoing struggles with unreliable electricity supply, as generation plummeted to 3,527.76 megawatts (MW) yesterday, marking a 877.28mw or 19.92 percent decline from the previous day's 4,405.04MW, according to data from the Nigerian Independent System Operator (NISO).

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The nation's critical electricity infrastructure is struggling to maintain output, prompting stakeholders to warn that the power sector's recovery will be hindered without immediate intervention to address underlying gas supply constraints and aging transmission facilities.

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Experts in the power sector attribute the challenges hindering growth to policy inconsistency, regulatory weaknesses, corruption, and a lack of political will.

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Prof. Wumi Iledare, an energy economist, notes that the power sector is not only underperforming but also financially trapped, with over N4 trillion in legacy debt affecting the entire value chain.

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According to Iledare, the so-called "solutions" have been temporary fixes, such as Central Bank of Nigeria interventions, guarantees, and subsidies, which address liquidity symptoms but ignore structural failures.

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Iledare emphasizes that until Nigeria adopts cost-reflective tariffs with targeted subsidies, enforces market discipline, and resets governance, the sector will remain insolvent, despite being kept alive through policy measures.

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He stresses that temporary cash injections cannot fix a structurally broken market, and that a more comprehensive approach is needed.

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Muda Yusuf of the Centre for the Promotion of Private Enterprise (CPPE) argues that Nigeria's power sector remains one of the most challenging areas of the country's economic reform agenda.

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Despite multiple reform efforts over the years, the sector continues to face deep structural, financial, and governance challenges, according to Yusuf.

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Yusuf identifies these challenges as multi-dimensional, spanning political economy constraints, tariff distortions, weak investor capacity, transmission bottlenecks, and a persistent liquidity crisis across the value chain.

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The inability to implement a fully cost-reflective tariff regime has led to subsidy dependence and widened the sector's financing gap, making government intervention necessary in the short term to prevent system collapse and sustain electricity supply.