The Minister of Power has revealed that the Federal Government currently owes over N4 trillion to electricity generation companies (GenCos) and electricity distribution companies (DisCos) in electricity subsidies.
During the public presentation of the National Integrated Electricity Policy and the Nigeria Integrated Resource Plan in Abuja, the Minister emphasized that this substantial debt is obstructing the power sector from providing optimal services to consumers.
The breakdown of the debt includes N2 trillion owed to GenCos as legacy debt, an additional N1.9 trillion designated for electricity subsidies in 2024, and N450 billion owed to DisCos for the same year.
The Minister expressed his concern, stating, “One of the major issues that concerns me is the huge debt in the sector. We are talking about legacy debt across the board, over N2 trillion, and we still have unpaid subsidies for 2024.” He questioned how GenCos could perform effectively, service gas payments, maintain turbines, and meet staff costs if they are owed a total of N4 trillion.
He acknowledged that the government cannot sustain the level of subsidy required by the rising demand for electricity. “The key issues are the market, liquidity, and sector reforms. We’ll continue to focus on that,” he said, indicating a potential review of tariff structures without committing to an increase.
The Minister also noted that the traditional model of electricity subsidy payments is unsustainable, and a new intervention model aimed at supporting specific segments of the population is under consideration.
Furthermore, he highlighted the need for increased investment in the distribution networks within DisCos, as the anticipated migration of more customers to Band A has not materialized due to insufficient investment by these companies.
