In a bid to address the persistent issue of power outages in the country, President Bola Tinubu has greenlit a series of measures aimed at tackling the challenges within Nigeria’s power sector. One significant step involves the gradual payments of power sector debts, estimated at over N3.3 trillion.
Under the approved plan, approximately N1.3 trillion owed to power generating companies by the Federal Government will be settled through a combination of cash injections and promissory notes. Additionally, about $1.3 billion (equivalent to N1.994 trillion using the current official exchange rate) owed to gas companies will be paid through a combination of cash payments and future royalties.
The Federal Government has already initiated the payment of the cash component of the N1.3 trillion debt owed to Generating Companies (Gencos). Plans are also in place to settle the remaining portion through promissory notes over a timeframe ranging from two to five years. Chief Adebayo Adelabu, the Minister of Power, disclosed these details at the 8th Africa Energy Marketplace held in Abuja on Thursday.
The event, themed “Towards Nigeria’s Sustainable Energy Future: Policy, Regulation, and Investment – A Policy Dialogue for the National Integrated Electricity Policy and Strategic Implementation Plan,” provided a platform for stakeholders to discuss strategies for achieving a sustainable energy future for Nigeria.
Chief Adelabu further highlighted the government’s efforts to subsidize electricity by covering the gas payment component for power generation. However, inconsistencies in these payments over the years have led to substantial gas debts and indebtedness to power generation companies, exacerbating the challenges within the sector.
Observers have described the approval of these measures by President Tinubu as one that reflects the government’s commitment to addressing the systemic issues plaguing Nigeria’s power sector. They say by prioritizing the settlement of outstanding debts and ensuring more consistent payments, the government will improve the reliability and stability of the country’s power supply, ultimately benefitting businesses and citizens alike.
