Nigeria's govt owes generation, distribution companies N4 trillion debt

The Minister of Power, Adebayo Adelabu, on Thursday, said the Nigerian government is owing electricity generation companies (GenCos) and distribution companies (DisCos) in the country over N4 trillion debt.

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Mr Adelabu disclosed this while speaking at the public presentation of the National Integrated Electricity Policy (NIEP) and Nigeria Integrated Resource Plan (NIRP) in Abuja on Thursday.

He explained that the debt to GenCos stands at over N2 trillion, while there is an outstanding unpaid subsidy for 2024 of N1.97 trillion. Additionally, he said DisCos are owed N450 billion for the 2024 electricity subsidy.

He added that the debt burden is crippling the sector, making it challenging for GenCos to perform optimally.

“One of the major issues concerning liquidity is the huge debt in the sector. We talk about legacy debt to GenCos of almost over 2 trillion. And we have an outstanding unpaid subsidy for 2024 of 1.97 trillion. DisCos are owed N450 billion for the 2024 electricity subsidy.

“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,” Mr Adelabu said.

He said the government cannot afford to continue to fund the level of subsidy that the consumption pattern is throwing up.

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“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. As consumption increases, government subsidy also increase,” he added.

Speaking further, he said, more than 60 per cent of the country’s manufacturing industry is completely off-grid.

“They engage in self-generation, not because they are in rural areas or they are in semi-urban areas. They are in locations where there is access to electricity. But how reliable is this access? We all know that there are lots of sensitive manufacturing processes that cannot tolerate a one-minute beep in electricity supply. Instead of taking such a risk by connecting to a grid that is not reliable, these industries would rather go for self-generation. And we know the impact of this.

“It is not cheap. It is very expensive. Therefore, our products or commodities being churned out from these factories can never be competitive. It can never be competitive,” he said.

He added that the only way to ensure that the sector contributes to economic growth, industrialisation, and national development is to ensure that grid supply is reliable so that all these companies that are currently off-grid can go back to the grid.

“This will reduce their cost of production. It will reduce inflation. And our locally manufactured goods can now compete with the imported ones,” he added.

The minister noted that the NIEP serves as the guiding framework for Nigeria’s power sector, ensuring that the journey towards universal electrification is evidence-based, pragmatic, and aligned with the country’s energy transition goals.

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He added that the National Integrated Electricity Policy and the Integrated Resource Plan present a unique opportunity to drive the transformation of Nigeria’s power sector through a data-driven and evidence-based approach beyond strengthening the sector.

These frameworks, he said, have far-reaching economic implications, directly impacting supply reliability to small and medium-sized enterprises and large industries, while reducing operational disruptions caused by power shortages, fostering economic growth and job creation, and accelerating local and regional development.