AfriPulse
The Centre for the Promotion of Private Enterprise (CPPE) on Sunday raised alarm that mounting debt estimated at nearly ₦4 trillion, structural inefficiencies, and political and economic constraints are threatening the fiscal sustainability of Nigeria’s power sector.
In a new policy brief released titled: “Nigeria’s Power Sector Reform: Managing Complexity, Liquidity, and Political Economy Constraints,” CPPE Chief Executive Officer, Dr. Muda Yusuf, described the sector as one of the most challenging areas of the country’s economic reform agenda.
He, therefore, called for urgent reforms in the sector.
Yusuf lamented that despite years of restructuring, the industry continues to grapple with tariff distortions, weak investor capacity, transmission bottlenecks, and a persistent liquidity crisis across the value chain.
He noted that the inability to implement cost-reflective tariffs—due to political and social sensitivities heightened by recent macroeconomic reforms—has entrenched subsidy dependence and widened the financing gap.
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Highlighting critical challenges facing the sector, CPPE boss lamented that electricity tariffs remain capped, limiting liquidity and discouraging investment.
He also highlighted structural weaknesses noting that post-privatisation concerns include poor investor capacity, transparency gaps, and inefficiencies among distribution companies.
“Power sector reform represents one of the most technically demanding and politically sensitive components of Nigeria’s current reform programme,
“The sustainability of the sector is threatened by mounting debt, structural inefficiencies, and political and economic constraints,” the CPPE brief noted.
He lamented that generating companies struggle to pay gas suppliers, while distribution firms fail to meet obligations, creating systemic financial distress.
Yusuf acknowledged that government bailouts, including bond issuances to settle obligations to gas suppliers and generating companies, have become unavoidable to prevent system collapse.
However, he cautioned that such interventions are fiscally unsustainable without deeper structural corrections and improved transparency.
By: Babajide Okeowo
Source: RipplesNigeria | Read the Full Story…
