The article by Nick Dazang, titled “Questions N3.3tn Power Bailout Can’t Answer: Not Yet Uhuru” (Daily Trust, 11 April 2026), raises critical concerns about the Federal Government’s proposed N3.3 trillion intervention in the Nigerian Electricity Supply Industry (NESI). Given the sector’s central role in industrialisation, productivity, and macroeconomic stability, such an intervention must be judged not by its size, but by its capacity to resolve the system’s binding structural constraints.
At a fundamental level, the N3.3 trillion figure—framed as a “full and final settlement”—fails the tests of adequacy, transparency, and systemic impact. Data from the Association of Power Generation Companies (APGC) indicate an outstanding exposure exceeding N6.8 trillion as of Q1 2026. Compressing this obligation into N3.3 trillion amounts to a non-consensual haircut of roughly 50 percent. In infrastructure finance, this signals regulatory arbitrariness, undermines contract sanctity, and elevates sovereign risk—deterring future investment in generation and grid modernisation.
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More critically, the intervention ignores the gas-to-power liquidity chain, which remains the primary constraint on thermal generation. GenCos’ obligations to upstream gas suppliers—both international and domestic—are largely non-negotiable and often dollar-indexed. Without ring-fenced payment structures or sovereign guarantees, any funds disbursed will be immediately absorbed by legacy gas arrears. The result is a liquidity recycling loop with zero incremental capacity and no meaningful improvement in plant availability.
Equally troubling is the silence on transmission. The Transmission Company of Nigeria (TCN) continues to operate a fragile, radial grid with limited redundancy, constrained wheeling capacity, and minimal automation. The absence of a functional SCADA/EMS framework severely limits real-time system visibility and contingency response. Recent grid disturbances have demonstrated how single-point failures—such as along the Shiroro–Kaduna corridor—can cascade into nationwide collapses. Without targeted capital investment in transmission infrastructure, upstream liquidity injections remain technically disconnected from grid stability.
The distribution segment remains the weakest link. Persistent Aggregate Technical, Commercial, and Collection (ATC&C) losses—driven by metering gaps, energy theft, weak billing systems, and poor collection efficiency—continue to erode sectoral liquidity. More fundamentally, the tariff regime remains only partially cost-reflective, constrained by socio-political considerations. DisCos routinely procure power at rates exceeding their effective recovery, resulting in structural revenue deficits. A backward-looking bailout does nothing to correct this forward cash flow imbalance and, predictably, sets the stage for another cycle of debt accumulation.
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From a system economics standpoint, the macro-impact of the intervention is likely to be marginal. Without parallel improvements in gas supply, transmission capacity, and distribution efficiency, net energy delivered to end-users will not increase meaningfully. Self-generation—via diesel and petrol—will therefore remain dominant, sustaining high production costs and undermining competitiveness. Investor confidence, particularly among IPPs and infrastructure funds, will remain subdued in the face of policy inconsistency and weak contract enforcement.
A credible reform pathway requires a decisive shift from episodic bailouts to structural realignment.
First, a comprehensive and independent forensic audit of sectoral liabilities is essential to establish a credible baseline. This must be followed by a legally enforceable securitisation framework to convert verified debts into tradable instruments with clear amortisation profiles.
Second, market design should pivot toward decentralised and embedded generation. Industrial clusters must be enabled—through regulatory flexibility and fiscal incentives—to develop captive and embedded power solutions, reducing dependence on the fragile national grid.
Third, tariff reform is unavoidable. A phased transition to full cost-reflectivity—supported by targeted and transparent subsidies—remains the only path to restoring commercial viability across the value chain.
Finally, accelerated deployment of distributed renewable energy, particularly solar PV, should be prioritised through local content policies, tax incentives, and concessional financing. This will enhance resilience, reduce grid pressure, and improve energy access at scale.
In sum, the N3.3 trillion intervention is an acknowledgement of systemic distress, but not a solution. Without coordinated reforms across gas supply, transmission infrastructure, distribution efficiency, and tariff architecture, the sector will remain trapped in a cycle of illiquidity and underperformance.
The declaration of Uhuru is, therefore, premature. The hard reforms have not yet begun.
Written by Engr. Bello Gwarzo Abdullahi, FNSE.
Email: bgabdullahi@gmail.com
