In a bid to combat Nigeria’s chronic power outages, President Bola Tinubu has sanctioned a phased repayment of power sector debts, totaling over N3.3 trillion. This initiative includes immediate cash payments and promissory notes to settle the N1.3 trillion owed to power generating companies (Gencos) and about $1.3 billion (N1.994 trillion) owed to gas companies.
The Federal Government has begun disbursing part of the N1.3 trillion debt to Gencos, with plans to complete payments through promissory notes over two to five years, as revealed by the Minister of Power, Chief Adebayo Adelabu, during the 8th Africa Energy Marketplace in Abuja. This event, themed “Towards Nigeria’s Sustainable Energy Future,” focused on policy, regulation, and investment.
Adelabu explained that the debts to gas producers would be settled using future royalties and income streams, a solution acceptable to the gas companies. He noted that Tinubu had ordered the immediate release of N130 billion from the Gas Stabilisation Fund to begin addressing these debts.
“Mr President has approved the submission of the Hon. Minister of State Petroleum (Gas) to defray the outstanding debts owed to gas supplying companies,” Adelabu said. “The payments will be in parts. Approval has been given for a cash payment of about N130 billion from the Gas Stabilisation Fund.”
Adelabu highlighted the significance of resolving these debts to secure firm contracts between gas suppliers and power-generating companies, ensuring consistent power generation. He also mentioned the government’s ongoing efforts to remove policy bottlenecks and justified the recent tariff hike, which affects only 15% of Nigerians.
The minister praised the achievements in power generation, including the addition of 700MW from the Zungeru hydroelectric power plant, raising the Nigerian Electricity Supply Industry’s capacity to 5,000MW.
The African Development Bank (AfDB) also expressed its support, announcing a forthcoming $1 billion policy-based operation to bolster Nigeria’s power sector reforms initiated by the new Electricity Act. Dr. Kevin K. Kariuki, AfDB’s VP for Power, Energy, Climate, and Green Growth, emphasized the bank’s commitment to enhancing Nigeria’s energy infrastructure and reducing its electricity access deficit.
Former Minister of Power Barth Nnaji and Labour Party presidential candidate Peter Obi called for a state of emergency in the power sector during the Dele Momodu Leadership Lecture. They stressed the need for robust infrastructure and embedded power solutions to achieve reliable electricity supply.
The lecture, which also featured former Ghanaian President John Mahama, underscored the importance of energy security for economic growth and highlighted successful power strategies from Ghana that Nigeria could emulate.
As Nigeria continues to grapple with energy challenges, these comprehensive debt repayment measures and strategic reforms represent significant steps towards a more stable and sustainable power sector.
