Credit Ratings can Unlock Long-Term Investment Across Nigeria’s Power Sector
By Patience Ikpeme
DataPro, a technology-driven credit rating agency, says credit ratings can help unlock the financing required to stabilise and expand Nigeria’s struggling power sector.
In a June 2026 brief, DataPro warned that decades of reforms and privatisation have not resolved underlying financial weaknesses. Mounting debts, chronic liquidity shortages and weak investor confidence have left the market reliant on repeated government interventions rather than sustainable private capital.
The agency described the sector as trapped in a cycle where weak collections by Distribution Companies disrupt payments to Generation Companies and gas suppliers, causing obligations to accumulate. That cycle prompts government bailouts and refinancing, which temporarily stabilise the system but fail to address the root problem of predictable revenues and durable financing.
DataPro said credit ratings matter because they make risks transparent and measurable, helping investors differentiate stronger operators from weaker ones. Independent assessments of balance sheets, collection efficiency and contractual stability allow lenders to price risk accurately and choose where to deploy capital, rather than avoiding the sector wholesale.
A stronger credit profile can also widen access to long-tenor instruments such as infrastructure and green bonds, reducing refinancing pressure caused by short-term funding. By lowering borrowing costs and lengthening tenors, ratings can attract the patient capital required for transmission upgrades, metering programmes, renewable projects and generation expansion.
Beyond facilitating access to finance, the rating process promotes better governance, financial disclosure and risk management among rated entities, DataPro said. Continuous market signals generated by ratings increase accountability and help investors monitor issuer health over time, strengthening the conditions for sustainable private participation.
DataPro cautioned that ratings are not a panacea: tariff reform, improved metering, tackling energy theft, resolving transmission bottlenecks and consistent policy remain essential. However, when combined with those reforms, credible credit ratings can build the trust and transparency needed to mobilise long-term investment and, ultimately, unlock the sector’s broader contribution to productivity, jobs and economic competitiveness.
