Power Grid Struggles with Gas Shortages and Financial Challenges

The power grid in Nigeria has been facing significant challenges recently due to gas supply issues and financial constraints.

As a result, electricity supply across the country has been affected, with only 16 power plants generating to the grid at 3,530.33 Mega Watts as of 3pm yesterday.

The biggest generators were Azura-Edo IPP (420MW), Kainji Hydro (415MW), and Shiroro Hydro (275.73MW). Gas suppliers have refused to increase supply to power plants citing a debt of over $1.3 billion for past supplies.

In an attempt to improve national grid supply, the Federal Government has agreed to pay electricity subsidies of N1.6 trillion in 2024 to the Nigerian Electricity Supply Industry, but a budget provision of just N450 billion.

No payment has been made for the month of January, further compounding the liquidity challenge facing the industry.

Minister of Power, Chief Adebayo Adelabu, confirmed the persistent liquidity issues coming from an inappropriate tariff regime, poor collections, and inadequate funding of government subsidies.

He also mentioned that the EU plans to invest 37 million Euros in the power sector to fund small hydro power, solar for healthcare facilities, rural electrification with isolated and interconnected mini-grids project, and circular economy in power sector project.

In response to the drop in supply, electricity distribution companies, DisCos, have moved to pacify consumers, assuring them of improved services soon.

However, the main problem in the sector remains the liquidity issue, which the government is trying its best to resolve.

The EU projects align with the Ministry’s strategy for the sector, and the Minister has promised to work with the EU on their programs, especially on Small hydro and state electrification within the new act.

The power grid’s struggle with gas shortages and financial challenges highlights the importance of addressing the liquidity issue and implementing a cost reflective tariff to ensure a sustainable and efficient electricity market.