…Tasks FG On Structural Corrections, Credible Reform
The Centre for the Promotion of Private Enterprise (CPPE), a frontline advocacy group committed to organized private sector (OPS) growth in Nigeria, has described the current financing model for the nation’s underperforming power sector as unsustainable and urged the Federal Government to consider other fiscal and monetary strategies to boost the sector and improve power supply to businesses and other consumers nationwide.
The Centre, in a Policy Brief titled ‘Nigeria’s Power Sector Reform: Managing Complexity, Liquidity, and Political Economy Constraints’ issued on Sunday by its Director/Chief Executive, Dr. Muda Yusuf, which critically appraised the challenges in the sector with the attendant power supply shortages nationwide, noted that the power sector remained one of the most challenging areas of the country’s economic reform agenda.
According to the group, despite multiple reform efforts over the years, the sector continues to face deep structural, financial, and governance challenges spanning political economy constraints, tariff distortions, weak investor capacity, transmission bottlenecks, and a persistent liquidity crisis across the value chain.
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It noted that the inability to implement a fully cost-reflective tariff regime, largely due to social and political sensitivities following recent macroeconomic reforms, had entrenched subsidy dependence and widened the sector’s financing gap, thereby making government intervention unavoidable in the short term to prevent system collapse and sustain electricity supply.
The CPPE, pointed out, however, that the current trajectory, characterised by rising sector debt currently at about N4 trillion was fiscally unsustainable without deeper structural corrections, improved transparency, and gradual but credible reform implementation.
The OPS-focused advocacy group noted that currently the sector’s liabilities had risen to nearly N4 trillion and continue to grow and called for an urgent need to ensure that all outstanding claims are properly verified, subjected to rigorous audit, and managed transparently and credibly
It recalled that the experience with fuel subsidy regimes had clearly demonstrated the vulnerability of subsidy systems to abuse and malpractice, hence the imperative of strong oversight and accountability mechanisms to prevent similar outcomes in the power sector.
To ensure long-lasting solutions to the current challenges undermining the performance of the power sector, the CPPE advocated a six-point policy measures for the government to consider in its sustained drive to ensure cost-efficient and fiscally transparent in the beleaguered power sector.
Specifically, it recommended that government should Adopt a Clear Roadmap to Cost-Reflective Tariffs,
and implement it in a phased and predictable transition toward cost-reflective pricing, with targeted social protection for vulnerable consumers; Strengthen Governance and Accountability of the sector, by improve transparency in subsidy management, debt verification, and financial settlements; as well as Address Distribution Sector Weaknesses, through the enforcement of performance benchmarks for DisCos, including recapitalisation, technical upgrades, and loss reduction.
In addition, the civil advocacy group canvassed Reform Transmission Management, with a view to
exploring alternative management or concession models for TCN to improve efficiency and investment; Support Decentralisation and Renewables in the sector by encouraging state-level initiatives, independent power projects, and renewable energy adoption to reduce pressure on the national grid; and Limit Fiscal Exposure in the sector by ensuring that financial support is clearly time-bound and linked to measurable reform milestones.
The CPPE concluded: “Power sector reform in Nigeria is a long-term and incremental process rather than a quick fix. The sector’s complexity, political economy constraints, and institutional weaknesses mean that progress will be gradual. However, without decisive action to address structural inefficiencies, improve governance, and ensure fiscal discipline, the current trajectory will remain unsustainable.
“A balanced approach—combining short-term government support with medium- to long-term structural reform—is essential to building a financially viable, reliable, and inclusive power sector that can support Nigeria’s economic growth and development”, it added.
