Nigerian energy companies are short about 2 trillion naira ($2.5 billion) in capital and new investors are needed to revive the sector, Olu Verheijen, an adviser to President Bola Tinubu on energy, told the media.
He argued that companies in the sector are over-leveraged and under-capitalized, which hinders their ability to invest in the distribution of electricity to homes.
"We need to set policies that facilitate reorganization and recapitalization and bring in new partners with new capital," Verheijen noted.
The adviser added that the recapitalization will come along with plans to make electricity tariffs cost-reflective, thereby improving the liquidity and viability of the power sector.
In early December, Nigerian Energy Minister Adebayo Adelabu said that the Nigerian government was considering transferring its stakes in 11 power companies to state governments to improve oversight and address the country's persistent power shortages.
In October, President Tinubu revealed that 90 million Nigerians lack access to electricity, saying the national grid meets only about 15% of the country's needs, which forced households and factories to rely on costly self-generation, meeting 40% of the nation's needs.
In an attempt to address power outages in the West African country, Tinubu assented to the Electricity Bill on June 9, 2023, which aims to harmonize Nigerian electricity legislation across the value chain of the country's power sector.
The bill also seeks to encourage private sector investment and state government participation in the power sector.