- The Federal Government said it would pay N2 trillion out of N4 trillion owed to electricity generation companies before the year ends
- It said the payments would be made through a combination of cash, through budgetary provisions, and promissory notes
- The government also stated that it did not eliminate the electricity subsidy, but only restructured it to benefit the poor
The Federal Government says it will pay close to N2 trillion out of the N4 trillion owed to power generation companies (GenCos) before the end of the year.
The Minister of Power, Adebayo Adelabu, disclosed this during a ministerial press briefing in Abuja on Thursday, April 17, where he addressed concerns about rising energy costs, unpaid subsidies, and recent tariff adjustments.
Recall that on April 14, GenCos said they would shut down operations if the Federal Government and other stakeholders continued to delay the payment of the N4 trillion debt, which they said threatens their operations.
The GenCos noted that the debt burden comprised N2 trillion for power supplied in 2024 and N1.9 trillion in legacy debts.
Speaking at the meeting, Adelabu said the debts are primarily unpaid subsidies, half of which were inherited, while the other half accumulated during the 2024 fiscal year.
He said, “These debts are unpaid subsidies due to the power-generating companies. We plan to pay close to N2 trillion out of the N4 trillion owed before the end of the year.”
The minister disclosed that the payments would be made through a combination of cash, through budgetary provisions, and promissory notes, which would serve as guaranteed debt instruments that GenCos could discount at banks for immediate cash.
Adelabu added that the government was in discussions with the Ministry of Finance and the Coordinating Minister of the Economy to finalise the structure for the payments.
‘FG didn’t eliminate electricity subsidy; it was restructured’
The Power Minister, while responding to questions about the recent increase in electricity tariffs, said the adjustments were necessary to ensure the sustainability of the power sector.
He added that the government has not eliminated electricity subsidies but only restructured them such that they benefit the poor, while the rich, who consume more energy, pay more.
Adelabu said, “Before now, about 85 per cent of customers were paying around N60 per kilowatt-hour, while the actual cost of supplying power was about N170. Only 15 percent of customers—mostly Band A—pay N209, and that is where there is a small margin.
“We’re not eliminating subsidies entirely, but we must restructure them. In the past, subsidies largely benefited high-consuming households. Now, we’re designing a system where only low-consumption users—mostly poor households—enjoy the subsidy.”
‘DisCos must provide 20 hours electricity to Band A consumers or be penalised’
The minister further stressed that the government will continue its oversight function to ensure that electricity distribution companies (DisCos) provide up to 20 hours of electricity to consumers in the Band A category.
He added that DisCos that failed to meet the obligation would be penalised by the government.
“Any DisCo charging Band A tariff but failing to provide 20 hours of electricity daily will be penalised.
“We’ve already seen cases where companies were fined over N200 million, and we won’t hesitate to do more,” he stated.
Adelabus also noted that the recent tariff review is to reflect the current cost of energy, which has become expensive, adding that the government remains committed to affordability.
“We are not on the side of the companies — we are on the side of Nigerians. But we must also face the reality that energy, like food, is expensive everywhere in the world,” he said.
FG’s N4 trillion debt to GenCos, DisCos hinders power sector performance – Minister
Meanwhile, TheRadar earlier reported that the Minister of Power, Adebayo Adelabu, said the Federal Government’s N4 trillion debt owed to electricity generation companies (GenCos) and electricity distribution companies (DisCos) hinders optimal performance of the power sector.
Adelabu stated this at the public presentation of the National Integrated Electricity Policy and Nigeria Integrated Resource Plan, in Abuja, on Thursday, February 27.
