Get Guardian on GoogleThe Federal Government is considering a revenue ring-fencing mechanism and credit enhancement arrangements to protect investments in new electricity generation, ensure payment to gas suppliers and generators, and address persistent liquidity challenges in the power sector.
Special Adviser to the President on Power, Dr Rilwan Babalola, disclosed this yesterday, during the second edition of the Lagos Energy Summit 2026, themed “Lagos Energy Evolution: Transforming the Future,” held at the Landmark Event Centre, Lagos, where he outlined measures required to make Nigeria’s electricity market commercially viable and attractive to investors.
Babalola, who was represented by a member of the Presidential Task Force on Power Sector Reset and Restoration, Uzoma Achinanya, said revenues generated from new electricity supply should be protected and channelled towards meeting the contractual obligations that enabled the power to be delivered, warning that improvements in electricity supply would not be sustainable without corresponding improvements in payments across the value chain.
He said that the electricity market had focused disproportionately on delivering power to consumers while neglecting the financial arrangements required to ensure that generators and their gas suppliers received payment.
Babalola said the government was proposing bilateral contracts backed by secure payment arrangements, including escrow accounts, payment waterfalls and visibility of revenue collection, to ensure that funds reach generators and gas suppliers.
The presidential adviser also called for credit enhancement to support electricity market participants where the market was not yet capable of carrying the risks associated with new investments.
He said such government-backed support should be recovered from revenues generated by the market, rather than become a permanent financial burden on the public purse.
Meanwhile, the Minister of Power, Joseph Tegbe, said the Federal Government had developed a four-pronged roadmap to address the country’s electricity challenges.
The roadmap, according to him, covers grid stabilisation, sector liquidity and sustainability, asset optimisation, and expansion and enhancement of the grid.
Tegbe said the government was adopting a corridor-based approach to align generation, transmission reinforcement and distribution capacity with demand in major economic clusters, identifying the Lagos-Ogun, Benin-Enugu-Port Harcourt and Abuja-Kaduna-Kano corridors as priority areas.
He said the Lagos-Ogun corridor and Abuja franchise area, which account for over 50 per cent of national electricity demand, would serve as pilots for the proposed 24-hour energy zones.
The minister said that a technical audit had been commissioned to establish a diagnostic baseline, identify critical constraints and guide the prioritisation and execution of interventions.
He also disclosed that the replacement of the 100 MVA transformer at Alausa, the addition of two 60 MVA transformers at Lekki and upgrades at Apapa and Ijora had strengthened key points in the Lagos electricity network.
Tegbe, who said that many generating units affected by recent outages had returned to service and the vandalised Egbin-Benin transmission line had been repaired, said a ministerial working group was finalising models to guide harmonisation between state and federal institutions under the Electricity Act 2023.
Lagos State Commissioner for Energy and Mineral Resources, Biodun Ogunleye, said the need for sustainable electricity investment was particularly important for Lagos, whose estimated electricity requirements had reached 12,000 megawatts, while conventional grid supply remained below 1,000 megawatts.
