Geometric Power CEO, Nnaji warns against subsidy risks as Lagos drives power reforms
Onome Amuge
Bart Nnaji, chairman and CEO of Geometric Power Group, has lauded Lagos State’s historical role in driving power sector reforms in Nigeria, while cautioning the state government against the financial risks of subsidising electricity.
Speaking at the Lagos State Energy Summit, Nnaji, a former special presidential adviser on power and Minister of Power, highlighted his own involvement in developing the Power Sector Reform Road Map, launched in Lagos in 2010. He also cited Lagos State’s pioneering efforts in bringing Enron into Nigeria’s power sector in 1999, under then governor, Bola Tinubu, and the subsequent development of a 10MW gas-fired plant.
Nnaji drew parallels with Geometric Power’s early agreements with the federal government for power projects in Abuja and Aba, emphasizing the company’s role in establishing ring-fenced electricity distribution networks.
He welcomed Lagos State’s current moves to leverage the 2023 Power Sector Act and establish its own electricity market, including the plans by Ikeja Electric and Eko Electricity Distribution Plc to create subsidiaries for state-level electricity management. He compared this favorably to the Aba DisCo model.
However, Nnaji expressed concern about the broader trend of state governments establishing their own power plants and distribution companies, effectively reversing the privatisation of the sector.
“The Federal Government failed to run such a model. Therefore, how could poor state governments succeed with such a model?” he questioned.
His strongest warning was against electricity subsidies. “Power enterprises must be run purely as commercial enterprises. In other words, there should be no room for a subsidy,” Nnaji stated.
He pointed to the substantial financial burden of federal government subsidies, exceeding N200 billion monthly, and argued that no state could sustain such costs. He cautioned that subsidies would drive Lagos State’s DisCos into financial difficulties, potentially leading to takeovers by their financiers.
Despite these concerns, Nnaji commended Lagos State’s plans to develop 4,000MW of new power generation capacity, acknowledging its potential to connect millions of currently unserved Nigerians.
He stressed the urgency of addressing Nigeria’s power deficit, noting that about 80 million Nigerians have no access to electricity, which is unacceptable in the 21st century.
Nnaji concluded by emphasising the need for the federal government to resolve the natural gas shortage in Nigeria, which he described as an awful paradox given the country’s vast gas reserves. He argued that the gas shortage hampers power generation, domestic manufacturing, and even Nigeria’s Liquefied Natural Gas exports.