The Federal Government has netted off about 97 per cent of more than N2.6 trillion in outstanding obligations owed by electricity Distribution Companies, leaving approximately N78 billion to be settled by the affected firms.
The development was disclosed during an engagement between the DisCos and a five-member debt-recovery committee established by the Federal Government.
According to the Nigerian Independent System Operator, NISO, the meeting provided an opportunity to review outstanding market obligations and assess payment arrangements for the remaining balances.
The debts have been identified as one of the financial constraints affecting the effective operation and development of Nigeria’s electricity market.
2015–2020 Obligations Reduced
The committee said government had already netted off approximately 97 per cent of outstanding obligations relating to the period between 2015 and 2020.
That intervention substantially reduced the amount owed by the distribution companies to the federation account, the electricity market and service providers.
However, the debt-recovery committee expressed dissatisfaction with some of the repayment proposals submitted by the DisCos.
Chairman of the committee and NISO Executive Director of Market Operations, Edmund Eje, said some proposals were unacceptable considering the size and age of the outstanding liabilities.
The committee is seeking repayment arrangements that would allow remaining debts to be cleared without further weakening financial discipline within the electricity market.
Power Sector Liquidity Remains Critical
Debt accumulation has been one of the major structural problems affecting Nigeria’s power industry.
The sector depends on payments moving through a chain involving electricity consumers, distribution companies, generation companies and other service providers.
When revenue collected at one part of the chain is not fully remitted, it can create liquidity problems across the wider electricity market.
Reducing outstanding obligations is therefore considered important to improving payment discipline and strengthening the financial position of electricity companies.
Although the government’s net-off has reduced the historical burden considerably, recovering the remaining N78 billion will still require cooperation from affected distribution companies.
The exercise also comes as authorities continue broader efforts to improve commercial viability, investment and service delivery across Nigeria’s electricity industry.
A stronger payment culture could help provide more predictable revenue for generators, transmission operators and other participants while supporting investment required to expand electricity supply.
