Addressing Nigeria's power sector challenges

Nigeria's power sector is facing significant challenges as gas producers and suppliers are considering cutting off supply to generation companies (Gencos) due to over one trillion aggregate debts threatening the gas-to-power value chain. Tunde Gbajumo, a power sector expert, shed light on the complexities of the situation in a recent interview on CNBC Africa. The power sector in Nigeria is currently at a critical juncture, with the looming threat of blackouts adding to the economic woes facing the country. Gbajumo pointed out that gas suppliers have accumulated significant debts, which in turn have impacted generation companies. The situation is exacerbated by the fact that the retail tariff for power has not been adjusted to account for the depreciating exchange rate. This mismatch in the financial aspects of the power sector has led to a liquidity crisis that is further compounded by transmission losses. Despite efforts to address the challenges, including new management in the sector, operational and financial issues persist at various levels of the value chain. Gbajumo emphasized the need for structural reforms in the power sector, stressing that simply injecting more money into the system may not address the underlying issues. He highlighted the absence of a coherent long-term vision for the sector, calling for a comprehensive roadmap that takes into account the current realities and stakeholders' perspectives. The interview underscored the need for collaborative efforts involving the government, regulators, and industry operators to chart a sustainable path forward for Nigeria's power sector.