The federal government is now owing electricity Generation Companies (GenCos) and Distribution Companies (DisCos) over N4 trillion, according to the Minister of Power, Adebayo Adelabu.
He broke the news today at a public presentation of the National Integrated Electricity Policy (NIEP) and Nigeria Integrated Resource Plan (NIRP) in Abuja, reports The Nation.
He said that owing to the debt, there have been challenges in strengthening the power sector to deliver optimum service to consumers.
Giving a breakdown, the minister said N2 trillion is owed to GenCos as legacy debt, while another N1.9 trillion is owed to them as part of the electricity subsidy for 2024, while DisCos are owed N450 billion for the 2024 electricity subsidy.
Adelabu said the government would not be able to sustain the payment of the electricity subsidy.
He, however, noted that the government would continue a new model of intervention by identifying a segment of the population that is really in need of it.
His words: “How do you expect the GenCos to perform optimally? How do you expect them to pay for gas, service, and maintain their turbines and other infrastructure as well as pay their staff? If a total of N4 trillion is being owed to them.
“I do not deceive myself. The government cannot afford to continue to fund the level of subsidy that our consumption pattern is throwing up. Because we have seen increasing consumption of electricity. The key issue, which is the market, liquidity, and sector reforms, we’ll continue to focus on that.
“We’ll look at the tariff again. I am not saying that we’re going to increase the tariff but to look at the tariff and see how we can improve upon our modest achievement of last year.”
He also decried the lack of investment in the distribution networks of DisCos, saying the government has not seen migration of more customers to Band A as it anticipated due to DisCos refusal to invest.
“They have refused to invest in this sector. Fine, it can be explained in a way, but a lot of investment is required for us to achieve an accelerated migration of lower band customers into Band A. It is taking a lot of time.”
He added that the government is looking at cancelling some sections of electricity consumers’ classification to make it three – bands A, B and C.
He said this is to reduce the tariff difference among them to enable those at the lower bands to enjoy more hours of electricity.
Adelabu noted that NIPR has been approved by President Bola Ahmed Tinubu in principle.
According to him, it has been submitted and will be approved by the Federal Executive Council next week.
He said, “So it is a major one for us in the sector, and we are happy that we have submitted this for the approval of the Federal Executive Council.
“I can assure you that by next week, at the next FEC, it will be approved.
“It has been approved in principle anyway, but the express approval is what we’re waiting for. Mr. President has seen it, has approved it.
“All the other ministers that we send these things to, they have sent their feedback, which we have incorporated.
“So I can tell you that it has been approved in principle, but the express approval will happen on Monday at the next FEC meeting.”
The minister said that in terms of capitalising investment into the sector, a huge investment is required.
He recalled that the government was able to attract about $2 billion into the sector last year.
“So last year alone, we were able to capitalise close to $2 billion into this sector.
“This cuts across the conventional electricity sector and the alternative renewable energy subsector. So we are happy with this.”
