•Calls for credible implementation of the reform
The Center for the Promotion of Private Enterprises (CPPE) has described the rising power sector debt, currently at N4 trillion, as fiscally unsustainable and has therefore called for deeper structural corrections, greater transparency and a gradual but credible implementation of reforms.
CPPE, in a Sunday statement by its chief executive Dr Muda Yusuf, attributed the rise in debt to the government’s inability to implement a cost-reflective tariff, due to social and political sensitivities.
The Center added that this development had led to dependence on subsidies and a growing financial gap in the sector, which had consequently made government intervention inevitable in the short term, to prevent system collapse and sustain electricity supply.
Describing the power sector as one of the most challenging areas of the country’s economic reform agenda, the Center lamented that despite multiple reform efforts, over the years, the sector continues to face profound structural, financial and governance challenges.
“Recent macroeconomic reforms, including currency unification and the elimination of fuel subsidies, have further complicated the reform environment by increasing pressures on the cost of living and intensifying resistance to tariff adjustments in the energy sector,” he added.
However, identifying the difficulty of establishing a fully cost-reflective tariff regime as a major constraint to power sector reform, the Center argued that without cost-reflective pricing, the sector would be unable to generate sufficient liquidity to sustain operations or attract new investments.
He added that the resulting subsidy burden had forced the government to repeatedly intervene financially, effectively transferring inefficiencies and revenue shortfalls to the public balance sheet.
He also identified structural weaknesses and privatization challenges, especially concerns about the technical and financial capacity of some private investors, as another obstacle standing in the way of an effective energy sector in the country.
The Center therefore argued that while a rapid transition towards complete removal of subsidies may be politically unrealistic, the government should embark on gradual and gradual reform.
Describing the current funding model as unsustainable, especially with sector liabilities currently at almost £4 trillion, the organization highlighted the urgent need to ensure all outstanding claims are properly verified, rigorously audited and managed in a transparent and credible manner.
He also called for the implementation of
Implement a gradual and predictable transition towards cost-reflective pricing, with targeted social protection for vulnerable consumers, among other things.