Nigeria may be standing at the edge of a long awaited turning point in its troubled electricity sector, following a bold plan by the Federal Government to raise $2.5 billion, about N4 trillion, to fix deep structural faults that have kept the country in darkness for decades.
The funding programme, driven by the administration of President Bola Tinubu, is designed to clear legacy debts owed to power generation and distribution companies while unlocking fresh investment for critical upgrades across the transmission and distribution networks. If executed as planned, officials say the intervention could stabilize supply for millions of Nigerians and release thousands of megawatts currently trapped by weak infrastructure.
Olu Verheijen, the President’s Special Adviser on Energy, revealed the details during an interview, noting that the first tranche of the debt issuance has already sent a strong signal to the market. According to her, about N501 billion was issued earlier this month at a 17 percent yield and was fully subscribed, reflecting renewed investor confidence in the power sector reset.
She explained that the remaining balance will be released in phases, either quarterly or every six months, depending on market conditions. Data seen on Bloomberg confirms the strong appetite for the initial offer, a development analysts say could lower financing risks for subsequent tranches.
Verheijen described the initiative as a decisive reset of Nigeria’s electricity market, one aimed at resolving long standing bottlenecks rather than applying temporary fixes. A significant portion of the funds, she said, will go into settling debts owed to power generation companies, many of which have struggled to operate optimally due to liquidity constraints.
Beyond debt repayment, the programme targets chronic weaknesses in electricity distribution. Part of the funding will be used to support distribution companies in closing Nigeria’s wide metering gap, a factor that has long undermined revenue collection and discouraged investment. Currently, only about half of grid connected customers are metered, leaving room for inefficiencies, estimated billing disputes, and revenue losses.
Transmission infrastructure is another major focus. Nigeria’s existing transmission network can evacuate only about 25 percent of the country’s projected 13,000 megawatts of available generation capacity. This mismatch has meant that even when power plants are capable of producing electricity, much of it cannot reach consumers. Officials say targeted upgrades will expand capacity and reduce system failures.
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In a statement, the government said clearing the debt backlog is expected to stabilise electricity supply for around 12 million registered customers and free up as much as 4,484 megawatts of generation capacity that is currently constrained by financial and technical issues.
The reform drive also includes changes to electricity pricing. Verheijen confirmed that Nigeria has begun transitioning to a market reflective tariff regime, moving away from blanket subsidies that distort pricing and strain public finances. According to her, the goal is a consumption based tariff framework where customers pay strictly for what they consume, a shift expected to improve transparency and sustainability across the value chain.
Nigeria’s electricity crisis has been one of the most persistent drags on economic growth and quality of life. Frequent national grid collapses, inadequate generation, ageing infrastructure, and poor coordination among sector players have left homes, factories, hospitals, and small businesses grappling with unreliable power.
The instability has forced millions of Nigerians to depend on petrol and diesel generators, driving up production costs for businesses and worsening household expenses. Experts warn that the continued reliance on self generation also carries heavy environmental and health costs.
Despite past reforms and periodic improvements, the grid has remained fragile, with repeated system failures eroding investor confidence. Analysts agree that without large scale funding and structural reform, the sector would remain stuck in a cycle of breakdowns and underperformance.
The $2.5 billion power intervention is being viewed as one of the most comprehensive attempts in years to break that cycle. While challenges remain, including execution risks and the need for sustained policy discipline, energy sector observers say the programme has the potential to mark a genuine shift.
If the funds are deployed efficiently and reforms are sustained, Nigeria’s long running power crisis may finally be approaching a credible path to resolution.
