Nigeria Now Faces Electricity Subsidy as FG Expresses Concerns

Minister of Power Adebayo Adelabu has raised alarm over the overwhelming indebtedness of Nigeria’s power sector to electricity generating companies and gas producers rising to about N3.3tn.

This was made known by the Federal government on Wednesday.

It also revealed that subsidy on electricity for 2024 would gulp about N3tn, whereas only N450bn was budgeted for this purpose in this year’s budget, adding that it was now very difficult to sustain power subsidy.

Minister of Power, Adebayo Adelabu, 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 N1.3tn 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 persons.

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 N1.3tn to the power generating companies, out of which 60 percent is being owed to gas suppliers. Today we have a legacy debt, before 2014, to the gas companies of $1.3bn; at today’s rate, that is close to N2tn.

“Now, if you add N2tn legacy debt owed gas companies and the N1.3tn being owed the Gencos, we have an inherited debt of over N3tn 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 the continuity in the generation of power.”

On the power crisis at the beginning of the year, he said, “So what happened in January was that the gas companies that have been managing to supply gas to generating companies decided to ask for their money by saying ‘we are not supplying gas until you pay your debts.’ If I was in their shoes, would I not do the same thing?”

Buttressing the issue of subsidy, the minister stated that countries such as Ghana, Togo, and the Benin Republic pay much more than Nigeria for electricity, stressing that the government might not be able to continue funding subsidies.

“What we have made provision for in the 2024 budget for subsidy is N450bn and we will require N2.9tn for subsidy. So can we afford it? We must be realistic. Can we afford it?

“N450bn is less than 20 percent of the almost N3tn that is required for a subsidy if we must continue at the current price (for electricity). So these are things that we need to decide on as a nation.”