Nigeria Moves to Settle N4 Trillion Electricity Debt Amid Blackout Fears

• FG pledged to urgently address a N4 trillion debt owed to GenCos after high-level meetings between the Minister of Power and GenCo leaders.
• The debt, comprising N1.9 trillion in legacy payments and N2 trillion for 2024, has impacted GenCos’ operations and raised fears of a nationwide blackout
• Adelabu assured stakeholders that part of the debt would be paid immediately, with the rest settled through financial instruments, as he called for sectoral reform

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

Bolaji Tunji, special adviser on strategic communication and media relations to Minister of Power Adebayo Adelabu, said in a statement Sunday evening that the federal government has committed to addressing the N4 trillion debt owed to the nation's Power Generation Companies (GenCos).

The commitment comes after high-stakes negotiations between the minister and GenCo chairpersons.

“The federal government has vowed to urgently address the N4 trillion debt crippling Nigeria’s power generation sector, following high-stakes talks between Power Minister Adebayo Adelabu and Chairmen of Generating Companies of Nigeria in Abuja on Tuesday. The move aims to avert an imminent collapse of the power infrastructure in the country,” the statement said.

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GenCos had last month warned of an imminent shutdown due to a N4 trillion debt owed by the Nigerian government for electricity generated and supplied to the national grid.

The companies stated that the debt, which consists of N1.9 trillion in legacy debts and N2 trillion for 2024, is endangering their power-producing units' ability to continue operating.

Adelabu gave GenCo executives the assurance that the government would prioritise paying off a sizable portion of the N4 trillion debt immediately, with the remaining balance being paid off through other loan instruments.

He stated that this would be suggested during a scheduled meeting between the leadership of GenCos and President Bola Tinubu.

“There is a need to pay a substantial amount of the debt in cash. At the minimum, let us pay a substantial amount, then ask for a debt instrument in promissory notes to pay the rest,” Mr Adelabu was quoted as saying.

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Adelabu promised to use financial tools like promissory notes to pay the remaining amount within six months, according to the statement.

“We recognise the urgency of this matter. The government is committed to resolving this debt to stabilise the sector and prevent further crises. President Bola Tinubu would meet with GenCos leadership to fast-track the process,” he said.

The minister acknowledged the government’s part in the sector’s challenges, offering to not only erase the debt but also adopt changes to relieve operational bottlenecks.

He highlighted the need to fully liberalise the power sector, asking Nigerians to accept cost-reflective rates.

The minister described strategies to move the industry toward sustainability, such as reevaluating regulations to lower taxes and improve market stability.

Additionally, he called on GenCos to work together on advocacy initiatives to inform Nigerians about the reality of tariffs and effective electricity consumption.

“Citizens must pay the appropriate price for the energy consumed. The federal government will continue to provide targeted subsidy for economically disadvantaged Nigerians. We have to understand that our economy cannot sustain subsidies indefinitely,” the minister said.

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The Chairperson of Egbin Power and First Independent Power Limited, Kola Adesina, said

“This is a national emergency. Everything hinges on power—industries, homes, hospitals. We cannot afford to let the sector fail.”

Joy Ogaji, the managing director and chief executive officer of the Association of Power Generation Companies (APGC), described the systemic issues that GenCos face, such as ongoing payment defaults, unpredictable gas supplies, and fluctuations in foreign exchange rates.

She pointed out that loan repayments and maintenance budgets had been severely impacted by the naira's decline from N157/$1 in 2013 to N1,600/$1.

“GenCos have borne unsustainable risks—from grid failures to unproductive taxes—while remaining patriotic,” she said

Company establishes partnership for power efficiency

Legit.ng reported that by supplying Eko Atlantic City with intelligent, energy-efficient solutions, Schneider Electric has stated its commitment to advancing sustainability in Nigeria's urban transformation.

Ajibola Akindele, the country president of Schneider Electric Nigeria, emphasized the importance of the project in Nigeria.

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Source: Legit.ng