FG’s N4 trillion debt to GenCos, DisCos hinders power sector performance – Minister

• Adebayo Adelabu said the Federal Government’s N4 trillion debt to electricity generation and distribution companies hinders the performance of the power sector
• He said the N4 trillion debt includes legacy debt and accruals from electricity subsidies
• The minister said the government cannot continue to fund electricity subsidies

The Minister of Power, Adebayo Adelabu, says the Federal Government’s N4 trillion debt owed electricity generation companies (GenCos) and electricity distribution companies (DisCos) hinders optimal performance of the power sector.

Adelabu stated this at the ongoing public presentation of the National Integrated Electricity Policy and Nigeria Integrated Resource Plan, in Abuja, on Thursday, February 27.

He said without addressing the debt challenge, the power sector would falter in delivering optimum service to consumers.

The minister said the over N4 trillion debt includes legacy debt and accruals from electricity subsidies.

Adelabu said N2 trillion is owed to GenCos as legacy debt, while another N1.9 trillion is owed to them as part of electricity subsidy for 2024, while DisCos are owed N450 billion for 2024 electricity subsidy.

“One of the major issues that concerns me is the huge debt in the sector.

“We are talking about legacy debt, which is across the board, over N2 trillion, and we still have an unpaid subsidy for 2024; we have another N1.9 trillion owed to them as part of electricity subsidy for 2024, while DisCos are owed N450 billion for 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?” he queried.

Government cannot afford to fund electricity subsidy

The minister further noted that with increasing electricity consumption in the country, the subsidy bill has seen a corresponding increase, adding that the government cannot continue to fund electricity subsidy.

He added that the government is focused on sector reforms that will improve liquidity by encouraging investments.

“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 issues are 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 said.

Electricity subsidy will hit N2.4 trillion by year-end – NERC

Meanwhile, TheRadar earlier reported that the Nigerian Electricity Regulatory Commission (NERC) said the cumulative electricity subsidy for 2024 will increase to N2.4 trillion.

The Commissioner of Planning, Research, and Strategy of the NERC, Dr Yusuf Alli, disclosed this at the PricewaterhouseCoopers’ (PwC) annual power and utilities roundtable, held in Lagos on Thursday, November 28, with the theme, ‘Reigniting Hope in Nigeria’s Electric Power Sector.’