During the 10th-anniversary celebration of the Nigerian Electricity Supply Industry (NESI) markets participants and stakeholder roundtable in Abuja, President Bola Tinubu disclosed that preliminary analysis has revealed a significant undercapitalization problem in the 11 Electricity Distribution Companies (DisCos), amounting to approximately N2 trillion.
Represented by the Special Adviser on Energy and Power Infrastructure from the Office of the Vice President, Mr. Sodiq Wanka, President Tinubu emphasized the necessity of recapitalizing the DisCos to attract new partners and capital. He noted that these actions are crucial to jumpstart performance in distribution, which plays a pivotal role in the entire power sector value chain.
President Tinubu stated, “Poor performance must not continue to drag the sector down. All licensees must not only have the technical capacity to deliver on their license but must also have the financial muscles to invest to improve their operations. Preliminary analysis shows that DisCos today are undercapitalized to the tune of at least N2 trillion.”
He insisted that the present tariff structure in the power sector is not cost-reflective, especially considering the recent devaluation of the Naira. According to President Tinubu, only 60% of the electricity sent to the grid is paid for as of the second quarter of 2023.
In addition to financial constraints, the President attributed the sector’s underperformance over the last decade to governance and operational issues that have plagued the industry. He emphasized the urgent need for a recapitalization process to enhance the DisCos’ capabilities.
President Tinubu described the 10th-anniversary celebration as an opportunity to reflect on the progress and challenges faced since the unbundling and privatization of the integrated national utility.
He pointed out that the privatization objectives, including improving sector efficiency and unlocking private sector investments, have not been fully realized over the past 10 years.
