Nigeria’s electricity sector must strengthen its creditworthiness through credible rating mechanisms if it hopes to attract the long-term investments required for sustainable growth, according to a new report by technology-driven rating agency, DataPro.
In its June 2026 rating brief, DataPro stressed that credit ratings have become increasingly important in building investor confidence and unlocking access to long-term capital for power sector operators grappling with liquidity constraints, mounting debt burdens, and weak cash flows.
The agency noted that despite years of reforms and privatization efforts, the Nigerian power market remains financially distressed, with many electricity distribution companies unable to generate sufficient revenue from customers. This, it said, has triggered payment disruptions across the entire electricity value chain.
According to the report, the challenges facing Distribution Companies (DisCos) have also affected Generation Companies (GenCos), which frequently contend with delayed payments to gas suppliers, increasing debt obligations and forcing government interventions through guarantees, refinancing schemes and bailout programmes.
“The focus has evolved; it is no longer just about generating electricity, but also about ensuring sustainable financing for the sector,” DataPro stated.
The agency observed that accumulated liabilities within the power market, coupled with recurring annual funding gaps, have made investors and lenders increasingly cautious about committing capital to the sector.
DataPro identified a widening confidence gap as one of the industry’s major obstacles, noting that investors often struggle to accurately assess risks in a market characterized by uncertain revenue streams and weak repayment structures.
To address this challenge, the report advocated broader adoption of credit ratings, describing them as an effective tool for providing independent risk assessments and distinguishing financially sound operators from weaker entities.
“A well-rated entity in the power sector is more likely to attract funding, as investors can objectively evaluate its strengths,” the agency said.
DataPro further highlighted the mismatch between the long-term financing requirements of power infrastructure projects and the predominantly short-term funding available within Nigeria’s financial market.
It noted that critical investments in transmission infrastructure, metering programmes, renewable energy projects and generation expansion require patient capital, while excessive reliance on short-term financing continues to increase refinancing risks and liquidity pressures.
According to the report, stronger credit profiles would enable sector players to access longer-tenor financing instruments, including infrastructure bonds, green bonds and corporate debt issuances, while potentially reducing borrowing costs.
The agency also warned that the electricity market cannot continue to depend indefinitely on government support mechanisms.
“While government interventions have been essential in averting deeper crises, the long-term sustainability of the sector necessitates a departure from reliance on refinancing programmes and emergency support,” the report stated.
DataPro maintained that improving transparency, strengthening financial discipline and embracing credit ratings would be critical steps toward restoring investor confidence and attracting the long-term investments needed to transform Nigeria’s power sector.
