Nigeria’s electricity supply crisis may worsen unless the Federal Government addresses mounting debts in the power sector, inadequate investment in gas production and persistent infrastructure challenges, industry stakeholders have warned.
The stakeholders said outstanding payments to gas suppliers, weak commercial arrangements and insufficient investment were undermining electricity generation and threatening efforts to achieve a $1tn economy by 2030.
They raised the concerns at the sixth annual conference of the Power Correspondents Association of Nigeria in Abuja, where they identified financial and structural challenges affecting the country’s electricity industry.
Their warning comes amid renewed disruptions to electricity supply across the country.
On November 5, the Nigerian Independent System Operator attributed a decline in national grid generation to inadequate gas supply to thermal power stations and reduced water inflows into hydroelectric reservoirs, resulting in shorter electricity supply hours and increased load shedding.
However, the Nigerian National Petroleum Company Limited subsequently said its gas transportation network remained available, arguing that gas production, commercial supply arrangements and actual deliveries to power stations should be examined separately.
Speaking at the conference, the General Manager, Gas Commercial, Nigerian National Petroleum Development Company, Bashiru Adoke, described the gas-to-power crisis as solvable but said it would require sustained investment and a reliable payment structure.
He identified the inability of electricity market operators to pay for gas supplied to generating companies as a major obstacle to stable power generation.
Adoke explained that generating companies receive insufficient payments for electricity produced, making it difficult for them to settle their gas invoices.
“There is no robust mechanism for payment of gas supply, because the proceeds from the market is not even enough to pay for gas supply. If you see the invoice monthly for energy generated, it is about 40 per cent and the gas takes about 60-75 per cent of production cost,” he said.
He disclosed that the market owed gas suppliers more than N630bn for electricity generated and consumed by Nigerians.
“The money is not even enough. That’s why you see in today, the market owes us over N630bn for power generated and consumed by Nigerians. We should try to establish a robust mechanism for payment of gas or else we would continue to have problems. The government intervention every three or four months won’t solve the issues,” he added.
Adoke warned that government efforts to settle legacy debts would not address the crisis if new liabilities continued to accumulate.
“The intervention by the government, which is on the legacy debt, is from 2015 to 2025. What about the debt from 2025? It is already accumulating and it is not being addressed. It is a problem,” he said.
He also called for increased investment in non-associated gas production, noting that excessive reliance on gas produced alongside crude oil could expose electricity generation to disruptions in oil production.
Although the government had introduced incentives through executive orders to encourage investment in gas projects, he said additional capital was needed to expand production.
The official further warned that high electricity tariffs could force more consumers to abandon the national grid for solar power and other alternative sources.
“I am scared for this national grid because by the time everybody abandons it and uses solar, I don’t know what the grid will be doing,” he said.
Meanwhile, the General Manager, Engineering, Transmission Company of Nigeria, Mojeed Akintola, identified inadequate electricity generation as a major constraint to transmission.
He explained that TCN could only transmit the electricity generated by power stations, adding that the company was expanding its capacity through the installation of new transformers and transmission lines.
However, he identified right-of-way disputes and vandalism as major challenges affecting the completion of transmission projects.
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