The Centre for the Promotion of Private Enterprise (CPPE) has raised alarm over Nigeria’s power sector, warning that mounting debt estimated at nearly ₦4 trillion threatens fiscal sustainability unless urgent reforms are implemented.
In a new policy brief titled “Nigeria’s Power Sector Reform: Managing Complexity, Liquidity, and Political Economy Constraints”, CPPE Chief Executive Officer, Dr. Muda Yusuf, described the sector as one of the most challenging areas of the country’s economic reform agenda.
Despite years of restructuring, the industry continues to grapple with tariff distortions, weak investor capacity, transmission bottlenecks, and a persistent liquidity crisis across the value chain. Yusuf noted that the inability to implement cost-reflective tariffs—due to political and social sensitivities heightened by recent macroeconomic reforms—has entrenched subsidy dependence and widened the financing gap.
Highlighting critical challenges facing the sector, CPPE lamented that electricity tariffs remain capped, limiting liquidity and discouraging investment.
It also highlighted structural weaknesses noting that post-privatisation concerns include poor investor capacity, transparency gaps, and inefficiencies among distribution companies.
The economic think-tank lamented that generating companies struggle to pay gas suppliers, while distribution firms fail to meet obligations, creating systemic financial distress.
CPPE acknowledged that government bailouts, including bond issuances to settle obligations to gas suppliers and generating companies, have become unavoidable to prevent system collapse. However, Yusuf cautioned that such interventions are fiscally unsustainable without deeper structural corrections and improved transparency.
The group urged the Federal Government to adopt a phased roadmap to cost-reflective tariffs with social protection for vulnerable consumers, strengthen governance and accountability in subsidy management and debt verification, enforce performance benchmarks for distribution companies, explore concession models for transmission management, encourage decentralisation and renewable energy adoption and limit fiscal exposure by tying government support to measurable reform milestones.
“Power sector reform in Nigeria is a long-term and incremental process rather than a quick fix,” Yusuf stated. He stressed that without decisive action to address inefficiencies and ensure fiscal discipline, the current trajectory will remain unsustainable.
The CPPE called for a balanced approach—combining short-term government support with medium- to long-term structural reforms—to build a financially viable, reliable, and inclusive power sector capable of driving Nigeria’s economic growth.
