N1.3trn power debt: Tinubu approves payment, unveils plan to liquidate gas debts
President Bola Ahmed Tinubu has given approval for the payment of N1.3trn legacy debts owed power generation companies.
Minister of Power, Chief Adebayo Adelabu speaking at the 8th Africa Energy Market Place 2024 in Abuja said that President Bola Tinubu has approved a plan to liquidate the debts.
According to him, “Mr. President has approved the submission made by the Minister of State Petroleum (Gas) to defray the outstanding debts owed to the gas supply companies to power generation companies. The payments are in two parts, the legacy debts and the current debts. For the current debt, approval has been given to pay about N130 billion from the gas stabilisation fund which the Federal Ministry of Finance will pay.”
“The payment of the legacy debt will be made from future royalties in exchange for incomes in the gas subsector which is quite satisfactory to the gas suppliers. This will allow the companies to enter into firm contracts with power generation companies.
“For the power generation companies, the debt is about N1.3 trillion and I can also tell you that we have the consent of the President to pay, on the condition that the actual figures are reconciled between the government and the companies. This we have successfully done and it is being signed off by both parties now. Majority has signed off and we are engaging to ensure that we have 100 percent sign off.
“The debt will be paid in two ways, immediate cash injection and through a guaranteed debt instrument, preferably a promissory note. This assures the companies that in the next three to five years, the government is ready to defray these debts.”
The Minister further stated that the government was working to get the distribution companies solvent and effective by unbundling their operations along state boundaries.
He insisted that the areas covered by the current DisCos were too large for them to deliver effective services to consumers.
In the same vein, the Chairman of the Nigerian Electricity Regulatory Commission (NERC), Engr. Sanusi Garba lamented the poor financial state of the DisCos, noting that it is difficult for them to raise the needed capital to invest.
Engr. Garba pointed out that the challenges facing the sector were a culmination of all past inactions and missteps by those saddled with the responsibilities of managing the sector both at policy and operational levels.
According to him, “Today when you look at distribution companies they are clearly and technically insolvent, and you also want them to raise capital in terms of debt or equity. It’s a Herculean task. I also want to mention that implementing the power sector reform requires very strong political will to implement decisions that impact on the wider public.”
However, the African Development Bank (AfDB) disclosed that it has so far spent over $450 million to support various power sector projects and programmes with another $1 billion planned to support the power sector reform effort by the government.
