The Federal Government is indebted to electricity generation and distribution companies to the tune of N4 trillion, a situation that is severely hampering the efficiency of the power sector.
Minister of Power, Adebayo Adelabu, made this revelation on Thursday at the ongoing public presentation of the National Integrated Electricity Policy and Nigeria Integrated Resource Plan in Abuja. He attributed the sector’s challenges to market liquidity issues and inadequate investment, warning that the current subsidy model is unsustainable.
Providing details, Adelabu stated that:
- N2 trillion is owed to Generation Companies (GenCos) as legacy debt.
- N1.9 trillion is owed as part of the 2024 electricity subsidy for GenCos.
- N450 billion is owed to Distribution Companies (DisCos) for electricity subsidies in 2024.
The minister expressed concern over how these debts impact electricity providers, affecting their ability to:
- Pay for gas and maintain infrastructure.
- Service turbines and ensure steady power generation.
- Pay workers, leading to inefficiencies in service delivery.
“How do you expect the GenCos to perform optimally? How do you expect them to pay for gas, service, and maintain their turbines, as well as pay their staff, if a total of N4 trillion is being owed to them?” Adelabu queried.
He also noted that increasing electricity consumption is further straining the sector, making it difficult for the government to sustain subsidy payments.
The minister emphasized the need for sector reforms and a new subsidy model that would focus on supporting only those in need. He also stated that the government is reviewing the current electricity tariff structure, although he clarified that this does not automatically mean an increase in rates.
Beyond debts, Adelabu criticized DisCos for failing to invest in power distribution infrastructure. He stated that the government had anticipated a faster migration of customers to Band A, which offers more stable electricity, but this has not happened due to the reluctance of DisCos to invest in their networks.
The minister reaffirmed the government’s commitment to ensuring a sustainable and efficient power sector, urging all stakeholders to play their part in resolving the ongoing liquidity crisis.
