Electricity Subsidy Escalates to N3 Trillion, Power Minister Expresses Concern

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The indebtedness of Nigeria’s power sector to electricity generating companies and gas producers has risen to about N3.3 trillion, the Federal Government has revealed.

It also revealed that subsidies on electricity for 2024 would gulp about N3 trillion, whereas only N450 billion was budgeted for this purpose in this year’s budget, adding that it was now very difficult to sustain power subsidies.

Adebayo Adelabu, Minister of Power, said Nigeria must begin to move towards a cost-effective tariff model, as he revealed that the country was currently indebted to the tune of N1.3 trillion to electricity generating companies, while the debt to gas companies was $1.3bn.

The minister, who spoke at a press conference in Abuja, which also had the heads of all the agencies under the Federal Ministry of Power in attendance, however, insisted that he would not resign his position as power minister following calls for his resignation by some people.

Although he stated that the ministries of power, finance, and petroleum were making efforts to tackle the crisis in the sector, Adelabu revealed that the electricity subsidy for January 2024 had not been paid yet by the Federal Government. He also revealed that the crash in power generation and attendant poor supply in January was because gas suppliers stopped supplying gas for the generation of electricity due to the indebtedness of the sector to gas producers.

 

Adelabu said, “Today, we are owing a total of N1.3 trillion to the power generating companies, out of which 60 per cent is being owed to gas suppliers. Today we have a legacy debt, prior to 2014, to the gas companies of $1.3bn; at today’s rate, that is close to N2tn.

“Now, if you add N2 trillion of legacy debt owed to gas companies and the N1.3 trillion owed to Gencos, we have an inherited debt of over N3 trillion in this sector. How will the sector move forward? Nigerians deserve the right to know this.
“However, we are working underground to make sure that we resolve these issues and pay these debts either through cash injections or through guaranteed debt instruments to ensure continuity in the generation of power.”