… It’s a question of timing – Presidency
… Debt settlement barely dents N7.6tn liability -GenCos
Nigeria is preparing to expand its cost-reflective electricity tariffs beyond its wealthiest consumers, part of a broader push by President Bola Tinubu’s administration to close a power-sector financing gap that experts say now requires roughly ten times current annual investment levels.
Sadiq Wanka, special adviser to President Bola Tinubu on power infrastructure, told an industry gathering on Wednesday that shifting the entire sector to tariffs that reflect the true cost of supply pricing is now “official government policy” and that the only open question is scheduling.
“It’s a journey that was started. It started with the move to cost reflectivity for Band A,” Wanka said, referring to the premium-service customer class Nigeria moved to market-based rates last year.
“It’s been difficult to move the rest of the sector to cost-reflective tariffs without ensuring we have all the backstops for vulnerable households. But that is official policy now; it’s just a question of timing,” he added.
Wanka added that extending this model across the broader sector has been delayed solely to ensure adequate social safety nets are in place. Rather than eliminating all support, the government plans to shield low-income citizens through targeted subsidies managed via the Nigerian Electricity Regulatory Commission’s Power Consumer Assistance Fund.
The comments underscore how Africa’s most populous nation is trying to unwind decades of underpriced power that has starved the grid of capital, discouraged generation companies, and left distribution utilities collecting far less cash than they deliver in electricity.
Nigeria’s government and private investors currently spend roughly $1 billion a year across generation, transmission, and distribution combined, Wanka said, a figure he said needs to increase roughly tenfold if the country is to meet its goals for universal electricity access and industrial-scale power supply.
“If we really want to close this electrification gap, and if we want to meet the aspirations that we have set for ourselves, for universal access and for sufficient power for industry, we essentially have to 10x that level of investment,” Wanka said at the third edition of Asharami Square energy event.
The estimate is drawn from Nigeria’s Integrated Resource Plan, a 2024 study commissioned by the government that projects power demand and supply options through 2045 using a least-cost planning method.
Wanka noted that by 2045, roughly 80 per cent of Nigeria’s grid capacity is projected to come from solar and hydropower, not because the plan was built around emissions targets, but because renewables were the cheapest.
“That analysis was done not really looking at a climate perspective, but looking at what is the least-cost way to deliver power,” he said.
While implementing these market-driven tariffs could prove politically difficult, Wanka acknowledged, the administration views the transition to full cost-reflectivity as a settled debate, leaving only the exact timeline to be determined.
Where investors can move
Rather than wait for systemic fixes, Wanka argued investors can already deploy capital in structures insulated from tariff and payment-discipline risk.
He pointed to Aba, where an investor-built generation capacity feeds a distribution network it owns outright, bypassing exposure to national tariff or subsidy decisions. Interconnected mini-grids offer a similar shield, he said, citing his own prior experience building projects where operators set tariffs directly with communities.
Government-backed viability gap funding, including the World Bank-supported Nigeria Electrification Project, has also de-risked mini-grid investment by subsidising upfront infrastructure costs while tying disbursement to performance, allowing developers to charge communities lower rates.
“You’re seeing a lot of investors and a lot of banks, even locally, tapping into those opportunities,” he said.
The removal of petrol subsidies has also shifted the relative economics toward grid and off-grid power over diesel and petrol generation, he said, making grid-connected investment more attractive than in years past.
Other openings include industrial-cluster power deals, such as arrangements in Kano bringing large industrial customers back onto the grid in exchange for feeder upgrades and battery storage, as well as feeder bifurcation to isolate service quality, and, under the Electricity Act 2023, private ownership of transmission assets for the first time.
Wanka said officials are finalising a Transmission Infrastructure Fund meant to seed early-stage private transmission projects by year-end.
Governance still catching up
The Electricity Act 2023, the first law signed by Tinubu, decentralised regulatory authority to Nigeria’s states. Wanka cited the newly formed Lagos State Electricity Regulatory Commission, along with Kano, Jigawa and Katsina states, which have taken equity stakes in local distribution utilities, as evidence states are moving quickly.
Still, he said implementation gaps remain, a newly announced Presidential Task Force on Power Sector Reset and Restoration has yet to be operationalised, and a National Electricity Policy and Strategy launched earlier this year still lacks a published implementation plan.
Clearing legacy debts owed to generation and gas companies is “ongoing,” he said, “but the pace is a bit slow.”
Olu Verheijen, special adviser to the President on energy, had on Tuesday said the Series I bond delivered on its objectives, with N501 billion, comprising N300 billion in cash and N201 billion in non-cash instruments, deployed in February 2026 to settle verified obligations.
She disclosed that N333.12 billion has been paid to eight GenCos operating 17 power plants, while the first coupon payment of about N63.5 billion on the seven-year bond was fully settled in July 2026, reinforcing the government’s credibility with investors.
Verheijen added that the programme is designed to deepen liquidity and strengthen the sector’s financial base, with Series II expected to scale the impact.
Joy Ogaji, managing director of the Association of Power Generation Companies (APGC), said total sector debt had risen to about N7.66 trillion as of June 2026, stressing that even after both bond series, only about 25.46 percent of the liability would be covered, leaving over N5.07 trillion outstanding.
She added that the intervention does not address the persistent monthly revenue gap, estimated at N122.7 billion.
Data from NBET shows that between January and April 2026, GenCos received an average of just 42.5 percent of their monthly invoices, with billing ranging between N194 billion and N252 billion during the period.
“GenCos are only getting paid about 42.5 percent of what they invoice each month, leaving an average monthly gap of N122.7 billion,” Ogaji said.
She further noted that the sector is also burdened by a N1.78 trillion tariff shortfall recorded between April 2025 and April 2026.
According to her, while the bond programme represents a positive first step, it is not a holistic solution to the sector’s liquidity crisis.
Ogaji warned that without structural reforms, including cost-reflective tariffs, improved billing transparency, funded subsidies, and stricter enforcement, the sector’s debt could rise to N17.11 trillion by 2033.
She described the situation as a growing financial contagion, cautioning that bonds alone cannot resolve the crisis.
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