- Azura Power MD Edu Okeke calls for a minimum of $250 million in shareholder funds for each electricity distribution company (DisCo) to ensure financial stability.
- Okeke urges the government to remove legacy debts from DisCos and attract new investors to revitalise Nigeria’s power sector.
Edu Okeke, Managing Director of Azura Power West Africa Limited, has called on the Federal Government to take bold action to address Nigeria’s power sector challenges by removing the legacy debts of electricity distribution companies (DisCos) and mandating them to raise their capital to at least $500 million each.
Speaking at the 2024 Power Correspondents Association of Nigeria (PCAN) annual workshop in Abuja, Okeke emphasised that the undercapitalisation of DisCos is a significant barrier to improving Nigeria’s power supply and infrastructure.
During his address at the workshop, “Nigerian Power Sector: Ending the Talk, Moving to Action,” Okeke highlighted that many DisCos are currently operating with negative equity, leaving them with little financial incentive or capacity to invest in critical infrastructure.
He pointed out that without substantial capital investment, including transformers, cables, and other essential equipment, there would be no meaningful progress in providing reliable power to Nigerians.
Okeke proposed that the Federal Government take a similar approach to the Central Bank of Nigeria’s policy of raising capital requirements for banks to address this issue. He suggested that the Nigerian Electricity Regulatory Commission (NERC) enforce a minimum capitalisation of $500 million for each DisCo, with existing shareholders required to dilute their stakes to allow new investors with natural capital to come in.
“To make meaningful progress, DisCos must be adequately capitalised,” Okeke stated. “Unfortunately, most DisCos have negative equity, leaving them little to no financial stake in their operations. Ideally, no DisCo should operate without at least $250 million in shareholder funds.” He further argued that the government needs to take decisive steps to address the debt burden weighing down the sector, adding, “the government must come clean and take a decisive step to fix this.”
Okeke also addressed Nigeria’s electricity distribution, acknowledging that a mix of operational and systemic problems has compounded the sector’s financial struggles. He stressed the importance of creating an environment where investors are incentivised to inject capital into the power sector and help bring long-term reforms.
The Minister of Power, Chief Adebayo Adelabu, represented by Dr Sunday Owolabi, Director of Renewable and Rural Power Access, reiterated the Federal Government’s commitment to completing its power sector reforms.
Adelabu emphasised the government’s focus on addressing infrastructure gaps, boosting power generation, improving transmission networks, and implementing reforms in distribution. “We are focused on ensuring that our policies are not only visionary but also practical, impactful, and sustainable,” Owolabi said, highlighting the government’s goal of achieving reliable 24-hour electricity for all Nigerians.
Engr. Aliyu Tahir, Managing Director of the Nigerian Electricity Management Services Agency (NEMSA), also spoke at the event. He reaffirmed the agency’s commitment to ensuring the safe and efficient delivery of electricity across the country and underscored NEMSA’s role in upholding quality standards and improving electrical safety to protect lives and property.
In his welcome address, PCAN Chairman Obas Esiedesa voiced concerns about the slow pace of progress in the sector, particularly regarding the national grid’s instability and the delayed rollout of electricity meters. Despite introducing the Service-Based Tariff and increased tariffs for Band A customers, Esiedesa noted that progress in metering has remained limited, raising doubts about the sector’s future viability.
The workshop concluded with a strong call for actionable reforms to address Nigeria’s power sector challenges, urging government and private sector stakeholders to move beyond discussions and take tangible steps toward transforming the industry.