Nigeria energy sector faces structural debt and refinery revival debates

Nigeria is facing critical challenges in its energy infrastructure, specifically regarding power sector liquidity and the potential revival of state-owned refineries.

In the power sector, experts have noted that while government bond issuances provide necessary liquidity relief for legacy debts—particularly for generation companies—they do not address underlying structural issues. These issues include non-cost-reflective tariffs, collection inefficiencies in the distribution chain, and gas payment arrears. The sector's debt backlog is estimated to rise by approximately ₦1 trillion annually, with current obligations cited between ₦3.3 trillion and ₦4 trillion.

Simultaneously, the federal government's plan to revive state-owned refineries has met with mixed reactions from stakeholders. While President Bola Tinubu has assured the public that refineries will resume operations, some experts urge a comprehensive technical and economic assessment to determine if rehabilitating old facilities is more sustainable than building new ones. Critics argue that previous attempts at revitalization have failed to yield results and suggest that funds might be better spent on new refinery projects to ensure economic prudence.