FG Promises Payment of 50% of N4trn Gencos Debt

By Adedapo Adesanya

The federal government has made a pledge to electricity generating companies known as Gencos on the payment of 50 per cent of a N4 trillion debt to avert a promised halt in electricity generation in the country.

The Minister of Power, Mr Adebayo Adelabu, made this promise on Thursday, saying that while the government can’t pay the entire N4 trillion, it would clear N2 trillion before the end of the year.

Business Post reports that of the N4 trillion owed, N2 trillion is for electricity generated in 2024, while around N1.9 trillion represents legacy debts.

On Monday, GenCos threatened to shut down the country’s power generation over the debt owed by the federal government.

The GenCos lamented that the mounting liabilities were crippling their ability to operate and threatening a total shutdown of electricity generation in Nigeria.

Mr Adelabu said the government has put in place measures to defray the debt through budgetary allocation and promissory notes.

“Almost all of the debt is inherited, while about half came from 2024.

“There are plans under way to clear the debt; while I am not sure that the debt will be cleared 100 per cent, it will be paid gradually.

“The modes of payment are of two ways: we have some budgetary allocation that will facilitate cash payment, and we are also in discussion with Gencos to get them some promissory notes. I can tell you that before now to the end of the year, we are going to pay close to N2 trillion of the 4 trillion,” he said.

He also revealed that Nigeria has achieved a 35 per cent reduction in electricity subsidies following a tariff increase implemented last year for some users.

The government last year eliminated subsidies for the 15 per cent of customers classified as premium users of electricity, including households and businesses consuming larger amounts of electricity under Band A, meaning they paid higher than other classes from Band B to E.

Mr Adelabu said this targeted tariff adjustment has yielded significant results, with “the market generating an additional N700 billion  in revenue, reflecting a 70 per cent increase.”