Total revenue shortfall in the Nigerian power sector has reached N1.6 trillion in eight years.
This is according to Sunday Oduntan, the executive director, research and advocacy, Association of Nigerian Electricity Distributors (ANED) who spoke to Punch on Monday.
Oduntan said the shortfall was recorded in the fourth quarter of last year.
“As at the last quarter of 2021, the total shortfall in the power sector is about N1.6 trillion,” he said.
A shortfall arises whenever electricity distribution companies and generation companies, otherwise called DisCos and GenCos, are not able to recoup an investment made from projects.
For instance, the tariff shortfall occurs when DisCos are unable to collect total tariff revenue from electricity provided to consumers. Shortfalls result in debts, which inhibit further investments and development in the sector.
Nigeria’s power sector has been faced with tough liquidity concerns since the distribution and generation arms of the industry were privatised in November 2013, according to Punch.
As a result, the Federal Executive Council approved the Power Sector Recovery Programme in March 2017 and made further amendments in 2019 with strategies to phase-out Federal Government support to the electricity market.
Outlining the key drivers of the PSRP, the government said revenue deficits in the sector were inevitable, thus creating unsustainable fiscal burden, necessitating various interventions in the form of loans to the sector by both the World Bank (WB) and the Central Bank of Nigeria (CBN).