- FG plans to settle outstanding N1.7 trillion debt by the end of June 2024
- Debts are to be settled through the issuance of bonds and promissory notes
- GenCos had said debts undermine their ability to meet obligations and may jeopardise further power generation
The Federal Government has said it plans to pay up the outstanding N1.7 trillion debt owed to Generation Companies (GenCos) by the end of June 2024 through issuance of bonds and promissory notes.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, stated this on Wednesday, June 5, while presenting the Accelerated Stabilisation and Advancement Plan (ASAP).
Edun, in his presentation, said the Federal Government plans to pay off its verified 2023 and 2024 obligations to GenCos and GasCos within one to six months.
The ASAP document stated that the government will “Develop and commence implementation of a robust and achievable plan for the resolution of the N1.7 trillion sector liquidity issue by end of June 2024.
“Key power sector government stakeholders to work with Honourable Minister of Finance and Coordinating Minister of the Economy; Executive Chairman, Federal Inland Revenue Services (FIRS) and Governor, Central Bank of Nigeria (CBN) to execute alternative settlement methods such as bonds and promissory notes for verified legacy debts.”
GenCos had said non-payment of debts may jeopardise further power generation
The Federal Government’s announcement comes days after the GenCos warned that non-payment of the N2 trillion debt and an estimated funding gap of N1.7 trillion contained in the 2024 Multi-Year Tariff Order (MYTO) may halt electricity generation for Nigerians.
Board Chairman, Association of Power Generation Companies, Retd. Col. Sani Bello, on Sunday in Abuja, had said the Federal Government’s non-payment of previously generated and consumed power threatens ongoing operations of power generation plants nationwide.
Bello said in addition to being owed huge debts, GenCos are also faced with unfavourable monetary and fiscal conditions due to the country’s economic reality.
“This huge debt outlay is now greatly inhibiting GenCos ability to meet their obligations to lenders, O&M operations, necessary maintenance, spare parts procurements and employee-related obligations, etc.
“The GenCos expectations of being settled through external support such as the World Bank PSRO has also been dampened due to other market participants’ inability to meet their respective distribution linked indicators (DLIs), enshrined in the Power Sector Recovery Program (PSRP).
“Notwithstanding this and other severe difficulties the GenCos have battled with since takeover in 2013, they have kept to the terms of their contractual agreements by ramping up capacity which has largely suffered systemic constraints,” he said.
GenCos want FG to present a clear payment plan to offset debts
Minister of Power, Adebayo Adelabu, had in May said President Bola Tinubu had approved a payment plan for the debt owed to gas suppliers and the GenCos that would involve immediate cash payment and promissory notes.
The GenCos, however, seemed not to be satisfied with the plan and demanded that the Federal Government should present a clear payment plan to offset the debts.
