The Special Adviser to the President on Power, Dr Lanre Babalola, has called for an end to Nigeria’s long-standing dependence on government funding and interventions to sustain the electricity sector.
Babalola, who is also Chairman of the Presidential Task Force on Power Sector Reset and Restoration, said the industry must be restructured to attract private capital and operate on a commercially sustainable basis.
He spoke in a keynote address titled, “From Market Survival to Market Sustainability: Resetting Nigeria’s Electricity Sector for Growth,” at an event marking Dr Joy Ogaji’s 15 years of service in the power sector and 10 years as head of the Association of Power Generation Companies.
Babalola said Nigeria’s electricity crisis was not simply a problem of insufficient generation capacity but a broader failure to convert available electricity into reliable supply, revenue and sustainable investment.
He said electricity only created economic value when it could be generated, transmitted, distributed, metered, billed, collected and paid for.
“When revenues are not collected, DisCos cannot meet their obligations. When GenCos are not paid, they cannot adequately maintain their plants or pay for gas. When gas suppliers are not paid, investment in gas supply suffers,” he said.
He described the situation as a “value-chain liquidity problem”, stressing that electricity, gas and finance were interconnected.
Babalola acknowledged that government interventions had helped keep the market functioning but warned that such interventions could not continue indefinitely.
“Government intervention should create the market, not become the market,” he said.
According to him, investors require predictable regulation, credible contracts, payment security, reliable fuel supplies and transparent settlement mechanisms before committing capital.
He also called for better utilisation of existing generation, transmission and distribution infrastructure.
“Our objective should not simply be more megawatts. It should be more value from every megawatt,” Babalola said.
He identified technical, commercial and collection losses as major obstacles to the sector’s financial sustainability.
The presidential aide advocated reforms to tariffs and subsidies, saying cost-reflective tariffs should be accompanied by improved efficiency, better service delivery and stronger revenue collection.
He said government subsidies, where necessary, should be targeted, transparent and adequately funded.
Babalola also advocated a transition towards a competitive wholesale electricity market based increasingly on bilateral contracts between credible buyers and sellers.
“Those who contract must have the capacity to pay. Those who sell must have the capacity to deliver. And those who fail to perform must bear the consequences,” he said.
He called for integrated planning across the gas, generation, transmission and distribution segments, arguing that electricity investments must support productive economic activity.
Babalola said the ultimate goal was to move Nigeria’s power sector from market survival to sustainability and from “managing scarcity to powering prosperity.”
Speaking at the event, energy economics expert, Prof Wumi Iledare, said the electricity sector remained one of Nigeria’s biggest economic challenges and opportunities.
“The challenge is not simply about generating more electricity; it is about creating a financially viable and efficiently governed electricity market where investment is rewarded, contracts are respected, liquidity is sustained, and consumers ultimately receive reliable and affordable power,” Iledare said.
He also commended Ogaji for her contributions to Nigeria’s electricity industry and her role in bringing the concerns of power generation companies into national policy discussions.
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