President Bola Ahmed Tinubu has given the green light for the payment of a significant chunk of Nigeria's power sector debts, which amount to a whopping N3.3 trillion.
Adebayo Adelabu, who serves as Nigeria’s Minister of Power, shared this news during the 8th Africa Energy Marketplace in Abuja on Thursday.
According to Adelabu, the federal government owes about N1.3 trillion to power-generating companies. To settle this debt, the government plans to use both cash injections and promissory notes. Additionally, there's another debt of approximately $1.3 billion (which converts to N1.994 trillion using the current official closing rate) owed to gas companies. This debt will be paid through a combination of cash payments and future royalties.
Adelabu emphasized that President Tinubu has given the go-ahead for the payment to commence. The government is taking steps to reconcile these debts between itself and the power-generating companies.
The payment process will be carried out in stages. For the current debt owed to power-generating companies, the government has already started making cash payments totaling about N130 billion from the Gas Stabilization Fund. This fund, managed by the Federal Ministry of Finance, will continue to make payments as needed.
Moreover, plans are in place to settle the remaining part of the debt through promissory notes over the next two to five years. This approach aims to provide a structured and manageable way to clear the outstanding dues.
It's worth noting that in March, the government made an initial payment of $120 million towards the debt owed to gas companies out of the total $1.3 billion outstanding.
Adelabu has consistently pointed out that the indebtedness to power-generating companies has contributed to the inconsistent power supply experienced in Nigeria. He believes that by addressing these debts, the government can take a significant step towards stabilizing the power sector and improving electricity supply across the nation.
However, the issue of electricity tariffs has been a point of contention. On April 3, the Nigerian Electricity Regulatory Commission approved a significant 230% increase in electricity tariffs for band A customers, who typically receive 20-24 hours of power supply. This decision was met with strong opposition from various groups, including the Nigeria Labour Congress, Trade Union Congress, and other concerned citizens.
In response to the outcry, the government later reduced the tariff hike by N18.2, bringing it down to N206.8 per kilowatt-hour from the initially proposed 225kwh.
Despite this adjustment, many Nigerians remain dissatisfied with the tariff hike and continue to call for its complete reversal.
In summary, President Tinubu's approval of the payment for power sector debts marks a significant step towards addressing the challenges faced by Nigeria's electricity industry. However, the journey towards a fully stable and efficient power sector is still ongoing, with tariff issues remaining a point of contention among stakeholders.
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