BY CHINYERE OBIORA, LAGOS – Nigeria’s premier credit rating agency, DataPro Limited, says the ultimate solution to the lingering electricity crisis in the country is leveraging credit ratings to overhaul the power sector and ignite sustainable growth
According to the Agency, the time to pull the plug on power sector bailouts is now because an emergency and fire-brigade approach that prioritises just adding more turbines to existing ones is certainly not an option in these current times.
It also said with financial transparency and trust building, credit rating is the definitive fast-track to repositioning the power sector and unlock its market’s potential for massive, and sustainable investment going forward.
Describing strategic Credit ratings as a game-changing spark for Nigeria’s economy, DataPro Limited said reality check indicates that among major challenges facing the nation’s power sector is the need to increase financing for sustainable growth rather than just generating electricity.
A recent report by DataPro indicates that the sector is hindered by a profound confidence gap, which is just as damaging as the physical electricity shortage, noting also that private investors are eager and willing to fund energy infrastructure, provided that sector risks are made transparent, measurable, and properly managed
Furthermore, the credit rating agency said what makes many hesitant about Nigeria’s power sector is the difficulty in clearly assessing those risks, adding the Credit ratings is capable to help bridge that gap, even as it said industry estimates suggest that trillions of Naira in obligations have accumulated across the market over the years, with fresh shortfalls emerging annually.
Maintaining that investors and lenders naturally become cautious in an environment where revenues are uncertain, and repayment structures appear fragile, the report said though the power sector is often viewed as one large high-risk industry, not every operator carries the same level of risk.
Additionally, the report said some companies may have stronger collection systems, healthier balance sheets, better management structures, or more stable contractual arrangements than others.
While explaining that without independent assessments, investors may simply avoid the sector altogether rather than attempt to distinguish stronger credits from weaker ones, DataPro said a well-rated power sector entity stands a better chance of attracting funding because investors can assess its strengths more objectively.
It stressed that lenders can make informed decisions based on structured financial analysis and independent risk evaluation instead of relying solely on assumptions or government backing,
The report said though such informed decision can help channel capital toward more efficient and better-managed operators, the structural problems in Nigeria’s infrastructure financing landscape is the mismatch between long-term projects and short-term funding, adding that power projects require patient capital.
It noted that domestic financing remains too short-term for major power sector projects, like transmission, metering, renewables, and generation, which require long-term investments to yield ex returns.
Also acknowledging that transmission infrastructure, metering programmes, renewable energy investments and generation expansion are not projects that yield immediate returns within a few months, the report said many financing arrangements available within the domestic market still remain relatively short-term.
Additionally, it said to address this mismatch between short-term funding and long-term project lifespans that causes refinancing pressure and ongoing liquidity issues, robust credit ratings can unlock access to long-term capital, such as infrastructure bonds, green bonds and corporate debt issuances.
By demonstrating a strong credit profile, businesses can lower their borrowing costs because investors feel more confident the debt will be repaid and the report said while Nigeria’s power sector is sustained by government interventions, Distribution Companies (DisCos) still struggle to collect sufficient revenue from customers.
