Government has Huge Electricity Subsidy Debt To Pay — Minister of Power

The Minister of Power, Chief Adebayo Adelabu, has voiced serious concerns over the persistent challenges plaguing Nigeria’s electricity supply. During his visit to power generating plants in Ogun and Ondo States on Wednesday, Adelabu highlighted several issues contributing to the nation’s electricity woes, including outstanding subsidy debts and gas supply constraints.

He expressed disappointment at the underutilisation of key power plants, noting that both the Olorunsogo and Omotosho Power Generating Plants were operating at below 25% of their capacity.

He attributed this underperformance primarily to shortages in gas supply, emphasising the urgent need to address these challenges to improve the country’s power generation capacity.

Furthermore, Adelabu stressed the importance of collaboration between the government and power companies to enhance operational efficiency and increase power supply nationwide. He acknowledged the undervaluation of government-owned generating companies and stressed the necessity of revitalising these assets before any potential sale.

To tackle the issue of gas supply constraints, he proposed a roundtable meeting and collaboration with the Minister of State for Petroleum (Gas) to ensure regular gas supply to power generation companies (Gencos). 

He called for a shift towards a full cost-reflective tariff regime if the federal government cannot fully fund electricity subsidies, citing liquidity challenges in the sector and the resulting accumulation of debts owed to power-generating companies. “And we also want to appeal to the federal government that once there is a subsidy promise, it has to be fully funded. If our government is not ready to fund subsidies, it is actually better for us to migrate to a fully-cost-reflective tariff, because liquidity is a major issue in the sector, which has led to a huge debt being owed power generating companies.

“And once they are owed, they are also unable to pay the gas suppliers. When the gas suppliers are not paid, they will be unwilling to supply regular gas to them.

“So where are these debts piling up? Where are they coming from? Part of it is the Discos are owing some portion of these debts while the federal government is also owing a huge portion of these debts, which relates to the unfunded portion of the subsidy that they pledge.

“So, I will do everything within my capacity. I have already had a meeting with the honourable Minister of Finance and Coordinating Minister of the Economy as well as the honourable Minister of Budget and National Planning, and the Special Adviser to the President on Energy, on how we can fund the outstanding subsidy unpaid by the federal government,” he noted

Adelabu assured Nigerians of imminent improvements in power supply, attributing recent supply drops to gas supply shortages. He pledged governments intervention to pay down outstanding debts owed to Gencos and reiterated his commitment to resolving the underlying issues affecting the power sector.

He further emphasised the need for a decisive action to address the systemic challenges facing Nigeria’s electricity supply. 

He called for a national conversation on the viability of continuing electricity subsidies and underscored the importance of adequately funding the sector to ensure sustainable and reliable power supply for all Nigerians.

Source: Arise News

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