Dike Onwuamaeze

The Managing Director of Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, has pointed out that Nigeria’s gross domestic product (GDP) could rise to $357 billion if electricity supply would increase from the present 4.500MW to 8,000MW.  

Rewane also noted that Nigeria has spent not less than $30 billion in the power sector in 26 years only to increase the country’s power generation by mere 500MW, from 4,500 MW in 1999 to 5,000MW in 2025 even though the sector has installed capacity to generate 13,000 MW.

He pointed these out in his presentation on September 3, 2025, at the Lagos Business School (LBS) Executive Breakfast Session titled ‘Nigeria Bailout or Lights Out: The Power Sector in a Free Fall’, where he stated categorically that the way out for the power sector that has N4.3 trillion indebtedness to banks would be either a bailout or lights out for Nigeria with its attendant consequences.
He said “According to the World Bank, a 1.0 per cent increase in electricity consumption is associated with a 0.5 to 0.6 per cent rise in GDP.

“If power supply rises to 8000MW, from current 4500MW, the bailout shifts money from government into investment, raising consumption and productivity. And due to multiplier effects, GDP could rise to $357 billion.”  
The FDC’s chief executive remarked that “in the last 30 years, Nigeria has invested no less than $30 billon to solve an intractable power supply problem.
“The initiatives, which started in 1999 when the power generated from the grid was as low as 4,500MW, have proved to be a failure at best.

“Twenty-six years later, and after five presidential administrations, the country is still generating 5,000MW. Nigeria is ranked as being in the lowest percentile of electricity per capita in the world.
“The way out is a bailout, or it is lights out for Nigeria,” he said.

He traced the origin of the huge debts of the power sector to its privatisation under President Goodluck Jonathan’s administration, when many of the investors thought they had hit a jackpot, only to find out to their consternation that they had bought a poisoned chalice.

Rewane defined a bailout as “injection of money into a business or institution that would otherwise face an imminent collapse,” noting that the bailout may be injected as loans, subsidies, guarantees or equity for the purpose of stabilising markets, protect jobs and restore confidence.

He said, “The president has promised to consider a financial bailout for the Gencos and Discos

“With a total indebtedness of N4.3 trillion to the banking system, the debt has shackled growth in the sector.”

Rewane warned that without implementing the bailouts for the power sector, the GENCOs and DISCOs would shut down at the risk of nationwide blackout.

 According to him, “the average output from the grid in the last 20 years has been stuck at 5,000MW making Nigeria rank in the lowest percentile of electricity per capita in the world.”

The economist said that the cost of the power sector’s bailouts include strains on government finances, crowding out of spending on health and education as well as its attendant moral hazard risk.

He added that the cost of bailouts in the sector has ranged from N213 billion, N701 billion, N600 billion in 2015, 2017 and 2020 respectively, to about N4 trillion in 2025.

Rewane, however, pointed out that implementing a bailout for the power sector could have a positive effect on the country’s economy if Nigeria’s actual power generation could rise from today’s 4,500 MW to around 8,000 and 10,000 MW.

The immediate gains, according to him, would include improved power generation and distribution capacity, more reliable electricity supply to homes and businesses as well as cost reflective tariffs.

Rewane also said that “firms can sell off non-core power assets (like diesel generator sets) to unlock capital; revenues redirected into core operations and expansion” and could operate on “more predictable costs and financial planning.”

He also said that the benefits of power sector bailout for the telecom firms in particular would include “lower tower downtime, cheaper running costs, stronger network outreach and multiplier effect of better network coverage across the economy” that will aid GDP’s growth.”

For now, the Nigeria’s power sector has been beset with “aging infrastructure, frequent blackouts, huge debts across the value chain, low tariffs and subsidy dependence, metering gaps and electricity theft,” Rewane said.

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