The federal government has announced that it has settled N205 billion out of the N1.3 trillion owed to Generation Companies (Gencos) in a bid to improve liquidity in the power sector.
The Minister of Power, Adebayo Adelabu, revealed this on Monday while addressing lawmakers during an oversight visit to the House of Representatives in Abuja.
He said the payment was part of the debt owned by the government to the different segments of the power companies.
“In terms of markets and liquidity, the government is also owing these companies, but they have started paying them little by little. Just about three weeks ago, out of the about N1.3 trillion we owe the Generation Companies (Gencos), we were able to pay them N205 billion. And they are also happy.
“But I will plead with the members of the House committee to help us mount pressure on the executive to continue to pay these people,” Adelabu said.
He noted that the recent improvements in electricity supply across parts of the country is not caused by the rainy season, but are the result of deliberate actions taken by the Bola Tinubu administration.
Developing Power Infrastructure
Speaking further, Adelabu said that, given the ongoing economic challenges in the country, including fuel scarcity, it is crucial to avoid a national blackout that would further strain Nigerians’ quality of life.
He emphasized the need to upgrade the country’s power infrastructure and revisit the existing tariff policy, stressing that all aspects of the power sector require attention.
“A lot of the towers are falling. The substations are dilapidated with very old transformers, some of which were installed in the 60s. We have not been able to replace them. The same thing with distribution infrastructure. The substations at the distribution level are also not working properly,” he added.
Furthermore, Adelabu described the metering gap as significant, noting that out of over 12 million electricity customers nationwide, only slightly more than five million are metered, leaving a shortfall of over seven million meters.
He outlined the ministry’s target to install two million meters annually over the next five years and expressed optimism that the sector, which had been considered stagnant for the past 15 years, is now making progress.
Regarding the Siemens project, Adelabu mentioned that the pilot phase is nearing completion, with several pieces of equipment from the project already being installed across the country.
“We went to Germany together and we had a meeting with the German Chancellor that we needed to accelerate the implementation of the presidential power initiative, which you all know as the Siemens project.
“And the following month, we had a meeting in Dubai and we signed an acceleration agreement to ensure that we continued with this project. And I can tell you, within one year, we have almost concluded the pilot phase of this project.
“The pilot phase included importation, commissioning, and installation of 10 power transformers across Nigeria, 10 power mobile substations across Nigeria. So the improvement you see today is not accidental. It’s not due to rainfall.
“Hydroelectric power in Nigeria today is just a bit over 20 per cent of our total power generated. The remaining almost 80 per cent is from gas. So it’s not rain, but the intentional activities of the federal government through the ministry of power. That’s why we are seeing all those improvements,” Adelabu added.
What you should know
- Despite multiple government interventions, the power sector continues to grapple with challenges, particularly due to underinvestment and lack of liquidity in the system.
- 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).
- This ongoing debt settlement effort is part of the government’s attempt to increase liquidity in the sector, and by extension, guarantee an increase in power supply.
