The Federal Government of Nigeria said on Wednesday that the country’s power sector now owes approximately ₦3.3 trillion to gas and electricity producing businesses.
It also showed that, in contrast to the ₦450 billion allocated for this purpose in this year’s budget, the electricity subsidy for 2024 would cost over ₦3 trillion, and it was already exceedingly difficult to maintain power subsidies.
It is imperative that Nigeria transition to a tariff model that is cost-effective. He disclosed that the nation owes $1.3 billion to gas businesses and ₦1.3 trillion to companies that generate power.
Despite calls from some quarters for his resignation, the minister said he would not step down from his post as power minister while speaking at a press conference in Abuja that was also attended by the chiefs of all the agencies under the Federal Ministry of Power.
Adelabu disclosed that the Federal Government had not yet paid the January 2024 electricity subsidy, despite saying that the ministries of petroleum, power, and finance were working to address the industry’s crisis.
Additionally, he disclosed that the January power output collapse and ensuing inadequate supplies were caused by gas providers ceasing to deliver gas for electricity generation as a result of the industry’s debt to gas producers.
Adelabu said, “Today, we are owing a total of ₦1.3tn 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 ₦2tn.
“Now, if you add ₦2tn legacy debt owed gas companies and the N1.3tn being owed the Gencos, we have an inherited debt of over ₦3tn 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.”
Regarding the early-year power outage, he explained, “In January, the gas companies that had been providing gas to the generating companies made the decision to demand payment for their services by stating, ‘We will stop providing gas until you settle your debts.’
” Would I not act in the same way if I were in their position?The minister supported the subsidy issue by pointing out that nations like Ghana, Togo, and the Benin Republic pay significantly more for energy than does Nigeria. She also emphasized that the government might not be able to continue supporting 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 per cent of the almost N3tn that is required for subsidy if we must continue at the current price (for electricity). So these are things that we need to decide on as a nation.”