How realistic is Nigeria’s 6500mw power generation target in 6 months?

Nigeria is on the path to boosting its power generation to an impressive 6,500 megawatts in the next six months, according to the Power Ministry. However, challenges persist as the government contemplates restructuring distribution companies to address the issue of large franchise areas. George Etomi, Chairman of West Power and Gas, shared his insights on these developments in a recent interview on CNBC Africa. The Power Minister's call for distribution companies to improve power supply has prompted mixed reactions. Etomi pointed out that while distribution companies have a financial incentive to provide power, challenges such as gas shortages and transmission issues hinder their operations. He emphasized the importance of dialogue between the Minister and distribution companies to address these challenges effectively. Etomi suggested a shift towards a franchising model for distribution companies to optimize their network areas and enhance efficiency. Another significant concern raised by the Minister is the need for distribution companies to accept a higher percentage of allocated load, ideally between 90% to 99%. Etomi explained that forcing companies to take on more load without addressing underlying issues could lead to operational failures and potential takeovers. He highlighted the complex macroeconomic environment that impacts distribution companies' profitability and operational capabilities. Addressing the controversial topic of electricity tariffs, Etomi underscored the importance of cost-reflective tariffs in achieving a sustainable power sector. He emphasized the need for collaboration and consultation with industry stakeholders to ensure market confidence and attract investment. Etomi urged the government to consider the significant gains made in previous discussions on tariffs and cautioned against abrupt changes that could undermine investor trust. As the Power Ministry aims to transition towards a commercially driven tariff system over the next three years, Etomi emphasized the critical role of ongoing dialogue and partnership between the government and industry players. He highlighted the long-term commitment of Nigerian investors in the power sector and stressed the importance of honoring past agreements to maintain investor confidence. In conclusion, the challenges and opportunities in Nigeria's power sector require a balanced approach that prioritizes collaboration, transparency, and long-term sustainability. As the country strives to enhance power generation and distribution, informed dialogue and strategic decision-making will be key to navigating the complexities of the sector and attracting much-needed investment.