By Patience Chat Moses
The Nigerian power sector has long been clouded by a myriad of challenges, chief among them being the financial instability that has plagued the country’s electricity generation companies (GenCos). In light of this, the Federal Government recently announced a payment of N205 billion from the N1.3 trillion debt owed to Generation Companies (GenCos) as part of efforts to improve liquidity in the power sector. In May, the Federal Government announced the sum of N130 billion to settle part of the N1.3 trillion gas supply debts in the Nigerian Electricity Supply Industry (NESI) as part of an effort to increase liquidity in the energy sector, and by extension, guarantee an increase in power supply. During a visit by the House of Representatives Committee on Power, the Minister of Power, Adebayo Adelabu, revealed that the part payment clearly shows the government’s deliberate actions to improve electricity supply in the country. He urged the lawmakers to continue pressing the executive branch to settle outstanding debts to power sector players. In his words, “In terms of market liquidity, the government has begun settling debts owed to these companies. Just three weeks ago, we managed to pay N205 billion out of the N1.3 trillion owed to GenCos.” Adelabu called on the House committee to sustain pressure on the executive to continue these payments.
Enhancing Power Sector Development
Speaking about developing the sector, Adelabu stressed the importance of preventing nationwide blackouts, particularly given the current economic challenges, including fuel shortages. He restated the need to renew power sector infrastructure and revisit the current tariff policy. “Many of our towers are failing, and substations are in poor condition with outdated transformers, some dating back to the 1960s,” Adelabu noted. He pointed out the significant metering gap, with over seven million out of 12 million electricity customers nationwide still unmetered. The Minister expressed optimism about the sector’s future, stating the ministry’s goal to install two million meters annually for the next five years.
The Power Minister further provided an update on the Siemens project, noting that the pilot phase is nearing completion with significant equipment installations nationwide. Adelabu added that the improvements recorded in the sector are intentional, driven by the Federal Government’s efforts through the Ministry of Power, and not just seasonal factors like rainfall. He explained that hydroelectric power only contributes about 20 per cent of the sector’s total generation, with gas covering 80 per cent.
The Chairman of the House Committee on Power, Victor Nwokolo, urged the Minister to maintain the recent achievement of 5,000 megawatts of electricity supply, stressing the economic impact of power shortages on businesses and employment. Nwokolo also called for stricter laws against power asset vandalism and criticized the recent tariff increase for selected customers, arguing that due process was not followed. He emphasized the need for better communication and consultation regarding tariff changes, as required by the Electricity Act. Nwokolo also suggested involving local vigilance groups in protecting electricity assets from vandals, indicating that the committee is considering legislative amendments to address these issues.
Despite multiple government interventions, the power sector continues to grapple with challenges, particularly due to underinvestment and lack of liquidity in the system. Bringing this to a wrap, as Nigeria continues to face its power sector challenges, the FG’s decision to settle a portion of the debt owed to GenCos marks a critical juncture.
Whether this payment will serve as a catalyst for meaningful reform or simply a temporary reprieve remains to be seen. What is clear, however, is that the future of Nigeria’s power sector lies in the government’s ability to address its financial and operational shortcomings comprehensively.
