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The Minister of Power, Adebayo Adelabu, has disclosed that the federal government is owing electricity generation companies (GenCos) and electricity distribution companies (DisCos) over N4 trillion in electricity subsidy.
The minister made the disclosure on Thursday in Abuja at a Public Presentation of the National Integrated Electricity Policy (NIEP) and Nigeria Integrated Resource Plan (NIRP).
Adelabu said the debt had posed challenge in strengthening the power sector to deliver optimum service delivery to consumers.
Giving a breakdown, the Minister said N2 trillion is owned 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.
The minister said the government would not be able to continue the model of electricity subsidy payment, adding that a new model of intervention is in the offing by identifying a segment of the population in need of it.
“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.
“I do not deceive myself. The government cannot afford to continue to fund the level of subsidy that our consumption pattern is throwing up, beecause 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 also lamented the lack of investment in the distribution networks of DisCos, saying the government has not seen migration of more customers to Band A as it anticipated due to DisCos refusing to invest.
“They have refused to invest in this sector. Fine, it can be explained in a way, but a lot of investment is required for us to achieve an accelerated migration of lower band customers into Band A. It is taking a lot of time,” he said.
He added that the government was considering cancelling some section of electricity consumers classification to make it three – bands A,B and C.
The minister said this is to reduce the tariff difference among them to enable those at the lower bands enjoy more hours of electricity.
