Nigeria's Power Sector Reforms: A New Era of Stability and Growth
President Bola Ahmed Tinubu has taken a significant step towards stabilizing Nigeria’s electricity market by approving a ₦4 trillion bond aimed at clearing verified debts owed to power generation companies (GenCos) and gas suppliers. This move is part of broader efforts under the Federal Government’s Renewed Hope Agenda to restore confidence in the sector and ensure its long-term sustainability.
The Minister of Power, Adebayo Adelabu, revealed this development during the Expert Forum on ‘Uninterrupted Power: The Industrial Imperative’ organized by the Nigeria Economic Summit Group. At the event, he outlined the ongoing reforms designed to make the power sector more commercially viable and efficient.
According to Adelabu, the bond approval is a key component of a financial stabilisation plan that addresses legacy liabilities which have hindered investment and liquidity across the electricity value chain. He explained:
“To stabilise the market, Mr President has approved a N4tn bond to clear verified GenCo and gas supply debts. Alongside this, a targeted subsidy framework is being developed to protect vulnerable households and ensure a sustainable path toward full commercialisation and a viable industry.”
This initiative is expected to provide much-needed relief to GenCos and gas suppliers, whose unpaid invoices have long constrained generation capacity and operational efficiency. The government’s approach includes not only debt clearance but also a comprehensive strategy to reposition the sector for “sustainability, efficiency, and growth.”
Key Components of the Power Sector Reform
The reform strategy spans several critical areas:
- Legislation and Policy Reform: Updating laws and regulations to create a more conducive environment for investment and operation.
- Infrastructure Development: Expanding generation and transmission capacity to meet growing demand.
- Energy Transition: Encouraging the adoption of cleaner energy sources and technologies.
- Local Content Expansion: Promoting the use of locally produced goods and services within the sector.
Adelabu also highlighted the positive impact of recent tariff policy reforms. These reforms have enabled cost-reflective tariffs for select consumers, leading to improved supply reliability and reduced energy costs for industries. As a result, sector revenue has seen a substantial increase.
“Industry revenue has increased by 70 per cent to N1.7tn in 2024 compared to the previous year, and the revenue is expected to exceed N2tn for 2025.”
Infrastructure Development Initiatives
In addition to financial measures, the government is investing heavily in infrastructure to support the power sector’s growth. One of the flagship projects is the Presidential Power Initiative, which aims to expand generation and transmission capacity across the country.
Under Phase Zero of the initiative, transmission capacity and grid stability have been enhanced, with over 700 megawatts of additional transmission capacity already achieved.
In Phase One, contracts have been signed with major international players such as Siemens Energy, CMEC, Elswedy Electric, and Power China. Financing arrangements are currently underway to support implementation. Phase One is planned to add 7,000 MW of operational capacity to the grid.
Parallel to these efforts, the government is also focusing on expanding generation capacity through the rehabilitation of existing National Integrated Power Projects (NIPP) plants, which are expected to unlock about 345 MW. Additionally, the successful integration of the 700 MW Zungeru Hydropower Plant into the grid marks a significant milestone in the sector’s development.
Moving Forward
Adelabu urged participants at the forum to support the Federal Government’s ongoing reforms, expressing optimism that collaboration with the private sector and development partners will accelerate Nigeria’s journey toward a stable, reliable, and industrially competitive power sector.
He emphasized that the government remains committed to ensuring a stable electricity market while continuing to invest in infrastructure and policy reforms that will drive long-term growth and sustainability.
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