…Tinubu To Meet GenCos Over N4Trn Debt
Nigeria’s Minister of Power, Mr. Adebayo Adelabu, has said that the Federal Government can no longer sustain electricity subsidies for consumers and advised them to prepare for the introduction of cost-reflective tariffs in the months ahead.
Adelabu, who spoke against the background of mounting indebtedness of the government to electricity generation companies (GenCos) currently estimated at over N4 trillion, pointed out that while the government remained committed to supporting economically disadvantaged Nigerians, the current subsidy regime is unsustainable.
He, therefore, stressed on the need for electricity consumers to pay the appropriate price for energy consumed to enable the government focus on the huge debt undermining current drive to boost power generation in the country.
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According to him, the introduction of tariffs that reflect the true costs of electricity will have positive impact on the power sector, and the government’s commitment to supporting vulnerable Nigerians will be crucial in mitigating the effects of this policy change.
This is even as he hinted that government was determined to offset the N4 trillion debt owed the GenCos through cash and other settlement options like promissory notes, adding that settling the debt had become imperative in order to improve power supply and avoid future crisis in the capital-intensive sector.
Currently, available data on the government’s liabilities in the sector showed that it owed over N4 trillion to the Gencos for overdue subsidy payments.
The Nigerian Electricity Regulatory Commission (NERC) disclosed that the average real tariff stood at N116.18 per kilowatt-hour, while consumers are charged N88.2 per kilowatt-hour, resulting in a subsidy cost of N27.97 per kilowatt-hour.
Meanwhile, the minister on Sunday hinted that President Bola Tinubu would be meeting with the GenCos’ representatives over the surging electricity debt, which is currently threatening to cripple the country’s electricity supply chain.
A statement issued by the minister’s Special Adviser on Strategic Communications and Media Relations, Bolaji Tunji, indicated that the meeting would be a follow-up to an earlier high-level meeting held last Tuesday between the minister and chairmen of Gencos in Abuja.
The minister’s aide confirmed that the government had agreed to immediate off-set a substantial part of the debt immediately, while the remainder would be cleared through financial instruments such as promissory notes within the next six months.
