…National grid failures force over 60% firms to generate own electricity
The Federal government has announced that it currently owes both the electricity generation companies (GenCos) and distribution companies (DisCos) over N4 trillion.
Adebayo Adelabu, Minister of Power, disclosed this while speaking at the public presentation of the National Integrated Electricity Policy (NIEP) and Nigeria Integrated Resource Plan (NIRP) in Abuja on Thursday.
According to Adelabu, the government’s is indebted to GenCos to tune of over N2 trillion, while there is an outstanding unpaid subsidy for 2024 of N1.97 trillion. Additionally, the government owe the DisCos N450 billion for electricity subsidy in accrued in 2024.
“One of the major issues concerning liquidity is the huge debt in the sector. We talk about legacy debt to GenCos of almost over 2 trillion and we have an outstanding unpaid subsidy for 2024 of 1.97 trillion. DisCos are owed N450 billion for 2024 electricity subsidy.
“How do you expect the GenCos to perform optimally? How do you expect them to pay for gas, service, and maintain their turbines and other infrastructure as well as pay their staff? If a total of over N4 trillion is being owed to them.
“I do not deceive myself. The government cannot afford to continue to fund the level of subsidy that our consumption pattern is throwing up. Because we have seen increasing consumption of electricity. As consumption increases, government subsidy also increase.
“Because we have seen an increase in consumption of electricity. As consumption increases, government subsidy also increases. There must be a finite subsidy regime that can be targeted at those that truly desire to be subsidised. So we are working on something like that.
“The key issues are the market, liquidity, and sector reforms. We’ll continue to focus on that. We’ll look at the tariff again. I am not saying that we are going to increase the tariff but to look at the tariff and see how we can improve upon our modest achievement of last year.”
he said.
The Minister also noted that more than 60 percent of the manufacturing firms has cut off connection from the national grid and now engaged in self-generation of electricity. This he said impacts the prices of the products being produced by the firms.
He stressed that the only way to ensure the sector contribute to economic growth, industrialization, and national development, there is need to ensure that there is reliability on grid supply so that all these companies that are currently off-grid can go back to the grid, and this will reduce their cost of production and reduce inflation.
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“This is not because they are in rural areas or they are in semi-urban areas. They are in locations where there is access to electricity. But how reliable is this access? We all know that there are lots of sensitive manufacturing processes that cannot tolerate a one-minute beep in electricity supply. Instead of taking such a risk by connecting to a grid that is not reliable, these industries would rather go for self-generation. And we know the impact of this.
It is not cheap. It is very, very expensive. Therefore, our products or commodities being churned out from these factories can never be competitive.
“So like I always say that the power sector is an enabling sector. It’s a strategic driver sector for other critical sectors in the economy. So this reinforces our commitment to delivering a more reliable, sustainable, and inclusive energy future for all Nigerians,” he added.
The National Integrated Electricity Policy (NIEP), according to him, will serve as the guiding framework for Nigeria’s power sector, ensuring that journey towards universal electrification is evidence-based, pragmatic, and aligned with our energy transition goals.
He also explained that the Integrated Resource Plan, IRP, a strategic roadmap that prioritizes least cost electrification and an optimized energy resource utilization. “Collectively, the National Integrated Electricity Policy and the Integrated Resource Plan present a unique opportunity to drive the transformation of Nigeria’s power sector through a data-driven and evidence-based approach beyond strengthening the sector.
“These frameworks have far-reaching economic implications, directly impacting supply reliability to small and medium-sized enterprises and large industries, while reducing operational disruptions caused by power shortages, fostering economic growth and job creation, and accelerating local and regional development.”
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