By Japhet Alakam

As the Federal Government concludes plans to start the phased bailout of the Nigeria’s electricity sector under the Presidential Power Sector Debt Reduction Programme, which is expected to avail more than N4tr to generating companies, GenCos, energy expert, Monica Maduekwe, has stated that the measure would only bring a temporary relief to the electricity crisis, bedeviling the country.

Maduekwe, founder of PUTTRU, Africa’s frontline platform, providing expert financing solutions to the continent’s energy sector, maintains that reliable solution lies in making sure that gas supply chain to GenCos is done in a commercially reliable pattern.

In her statement, on the structural drivers of energy system performance and how to develop practical frameworks for unlocking capital and restoring market discipline, she noted that, “Nigeria’s power crisis is often framed as a shortage of gas. In reality, gas exists. What is missing is a system that ensures it reaches generation companies on commercially reliable terms. The reason gas fails to reach power plants today is not a lack of availability, but a lack of payment.

“Over the past decade, gas has been supplied into the power sector under increasingly uncertain settlement conditions. Generation companies procure on credit. Payments are delayed. Debts accumulate. Suppliers, in turn, scale back or redirect supply to more reliable buyers, including export markets. The result is predictable: gas flows away from the power sector, not toward it.,

“The current approach of issuing bonds to settle legacy debts owed primarily to generation companies, may provide temporary relief, but it is inherently delicate. It transfers the burden to the public balance sheet without changing the structure that created the problem. Borrowing to pay for past consumption, in a system where payment discipline remains weak, only postpones the risk and increases future exposure”.

She said a reliable solution to this challenge lies in a choice that will not rely on continued fiscal absorption.

“Rather than asking government to carry these obligations, the outstanding payment claims within the gas-to-power value chain, anchored primarily at the generation level, can be restructured into a commercially managed vehicle, where private investors step in at the level of the system, not individual counterparties, to take an active position in future gas supply and settlement.

“In practical terms, this means creating a structure that steps into these validated payment obligations, working alongside existing market operators to restructure and manage them over time, backed by identifiable cash flows within the system. In return, the vehicle secures priority over gas supply arrangements and participates directly in how those flows are priced and settled going forward.”

Maduekwe said the Electricity Act 2023 already gives regulators a pathway to support such a transition, using NERC’s licensing powers and NBET’s transitional role in the market.

Earlier, the Nigeria Labour Congress (NLC) had strongly rejected the proposed bailout, describing it as unjustified, claiming it rewards failure, and suggesting the money should be used for public ownership of the sector rather than supporting private companies.