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Nigeria to Review Privatization of Power Assets After Supply Fails to Improve

Feb 24, 2020

Nigeria will review the sale of power assets to private investors after they have been unable to improve power supply in Africa’s most populous country.

The buyers of the assets are making technical and commercial losses and only distribute a fraction of existing capacity to end-users, the Power Minister said.

While the West African nation can generate 13,000 megawatts, it is only able to transmit about 4,500 megawatts to the power grid with only 3,000 megawatts of that getting to consumers, Sale Mamman, Nigeria’s Power Minister said Wednesday in Abuja.

A proposal to review the privatization has been submitted to the cabinet for consideration. Companies incapable of running the distributors “should give way to whoever that is ready to come and invest,” Mamman said.

Nigeria, which vies with South Africa as Africa’s largest economy, is still grappling with blackouts despite power privatization seven years ago that promised to fix its electricity challenges. Only 60% of residents have access to electricity and even those still remain plagued with regular outages due to poor infrastructure.

A $2.7 billion debt owed to power producers by the state-owned company that buys their output and resell to distributors, is threatening to undermine their viability and crumble the power market.

Nigeria plans to use a $3 billion loan it’s negotiating with the World Bank to tackle mounting debt in the power sector after approving a tariff increase that comes into effect in April.

 

Source: Bloomberg