As electricity demand rises in Nigeria, the Presidency has stated that the country needs to increase annual investment in the power sector to $12 billion through 2045 to achieve reliable electricity.
This, it said, means the country is recording an annual power investment deficit of about $11 billion as only $1 billion is currently being spent on the electricity value chain, which affects efforts to expand the sector.
Special Adviser to the President on Power Infrastructure, Sadiq Wanka, made this known during his keynote speech at the Asharami Square 3.0 organised by Sahara Group in Lagos on Wednesday, July 22.
Speaking on the theme of the event, “Energizing Africa’s Future: Legacy, Impact and Transformation,” Mr Wanka x-rayed the current state of Nigeria’s power sector and highlighted what needed to be done to make the sector perform its critical role of driving industrial and economic development.
“In terms of investment needs, if you look at what we are spending today across the electricity value chain from generation to distribution it is somewhere in the region of $1 billion investment, both public and private,” Wanka stated.
“If we really want to close the electrification gap and if we want to meet the aspirations that we have set for ourselves for universal access, and sufficient power for the industry, we essentially have to increase the level of investment,” he added.
He stressed that closing the investment gap requires concerted efforts across policy and regulations and “a disciplined approach to investment attraction.”
Wanka said the investment roadmap is based on Nigeria’s Integrated Resource Plan 2024, which projects energy needs for the country through 2045.
According to him, the plan also projects that by 2045, about 80 per cent of the country’s installed power capacity will come from renewable energy sources, particularly solar and hydropower, driven primarily by cost competitiveness rather than climate policy.
While admitting that much needs to be done to scale up investments and meet the target, he however, highlighted ongoing reforms in the power sector. This, according to him, includes the 2023 Electricity Act, which further liberalised the power sector, engendering greater participation of sub-nationals, leading to states having powers to regulate their electricity markets, hence the establishment of state electricity regulatory commissions.
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With this, he said a couple of states who now have regulatory commissions have started exercising their powers not just in assuming regulatory control but also in investments across the electricity value chain in their jurisdictions.
He pointed out that the reforms are creating new opportunities for private investments in the electricity value chain and would strengthen the power sector in the long run.
In terms of distribution, he said majority of the electricity distribution companies are becoming more disciplined and meeting their market obligations, paying their bills to the system operator and the Nigeria Bulk Electricity Trading Company (NBET).
On the quest to implement cost-reflective tariff and boost liquidity in the sector, Wanka said it is a journey, that has started with the Band A, even as it remained difficult to make the rest of the consumer bands pay the full cost.
He said implementing the cost-reflective tariff in Nigeria would encourage investments in embedded generation, interconnected mini-grids, and industrial power networks that can provide reliable electricity.
He said that in the current power sector climate, there are opportunities for investments across the power value chain. These, according to him, include, powering industrial clusters, (example, Aba ring fence, operated by Aba Power in Aba State), transmission infrastructure, small- and large-scale hydropower, investing in strengthening distribution infrastructure, and local equipment manufacturing.
On transmission, he said that with the new Electricity Act, private players can invest and operate a transmission infrastructure, and no longer exclusively controlled by the Transmission Company of Nigeria (TCN).
He said the Federal government is currently working with the National Electricity Regulatory Commission (NERC) to finalise the Transmission Infrastructure Fund, hopefully before the end of this year, to aid investments in transmission projects, giving access to private sector players.
While acknowledging various metering schemes, he stressed the need to accelerate mass metering to close the existing gap of over 5 million customers as a way of also boosting liquidity in the power sector.
He further noted that while there are opportunities for investments, the financing landscape has not been modelled to identify those opportunities in the power sector and develop them.
In closing his presentation, the presidential aide stated that for investors, the key priority should be to develop the ecosystem to attract investment opportunities.
For development partners, he called for their support of reforms on investment attractions and lead advocacy for a cohesive Nigeria-led power sector plan.
For the media, he stressed the need for deepening understanding of the reforms and market participants’ performance and hold stakeholders accountable on the pace of effectiveness of reforms and performance.
Victor Ezeja is a Nigerian journalist skilled in producing insightful news analyses, feature stories, and interviews that simplify complex issues and drive informed public discourse. His work combines rigorous research, balanced reporting, and compelling storytelling to highlight developments shaping industries and society. Victor, who holds a Master's Degree in Mass Communication, specializes in energy, aviation, business, and economic reporting. He can be reached via @VICTOREZEJA on X