April 20, (THEWILL) – Last week, the Minister of Power, Adebayo Adelabu, disclosed that the Federal Government was owing electricity generation companies Gencos and distribution companies, DisCos, over N4 trillion.
While speaking at the public presentation of the National Integrated Electricity Policy, NIEP, and Nigeria Integrated Resource Plan, NIRP, in Abuja last Thursday, the minister said the indebtedness is N2 trillion apiece to each company for 2024 and an additional N450 billion for electricity subsidy 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 N2 trillion and we have an outstanding unpaid subsidy for 2024 of 1.97 trillion. DisCos are owed N450 billion for 2024 electricity subsidy,” Adelabu admitted. Surprisingly, he admitted that this debt can cripple the capacity of the companies, in terms of payment for inputs such as gas, service maintenance of turbines and payment of staff.
Apart from also lamenting the immediate impact of this indebtedness on the performance of these companies such that manufacturing companies in their numbers have disconnected from the national grid, the minister notably avoided mentioning the burden that the average Nigeria consumer has been made to bear as a result of illegality.
To say that the Federal Government’s indebtedness to the GenCos and DisCos is illegal is to be mild. It is, in fact, criminal. To allow the debt to accumulate to such a large sum of money, to the extent that the companies cannot perform optimally, is just as a disincentive to enterprise as it is actionable.
While the government was busy taxing Nigerians through an obnoxious policy of classification into bands to make for the so-called efficient supply of power, it failed to fulfil its obligation to pay for its consumption from the same companies.
For a country where electricity output has stagnated at between 5,000 megawatts and 7,000 mega watts capacity for decades, this indebtedness by the government shows the levity and laxity with which this sector has been handled over the years.
When the government, which controls the resources of the country can owe N4 trillion to private electricity companies, who goes about enforcing payments? Yet, these same companies do not hesitate to mete out punitive measures against Nigerian electricity consumers in cases of default in payment.
In fact, public consumers have had bitter stories to tell about horrible treatment by DisCos, from illegal disconnection and arbitrary estimated billing that ought to have been abolished in the past 10 years, if the government had pursued it with a sense of purpose, even its own policy on metering and power generation.
This lack of a sense of purpose is the source of this outrageous N4 trillion debt owed to GenCos and DisCos.
It is alarming that Nigerians would probably not have learnt about this indebtedness if the Chairman of Transnational Corporation (Transcorp) Plc, Mr Tony Elumelu had not called on the Federal Government to expedite action on the payment of debts owed to electricity generating companies, GenCos, before Adelabu’s disclosure.
Speaking at the company’s 19th Annual General Meeting in Abuja recently, Elumele said the problem had been with the electricity sector for the past 12 years.
“The main dominant challenges of the power sector namely, liquidity infrastructure and gas availability remain unresolved 12 years after some of us invested heavily in this sector. As at date the Federal Government owes your company over N600 billion ($400 million),” he lamented, adding: “Much as we, as patriotic Nigerian investors, are committed to supporting the efforts of the government in fixing the Nigerian economy we have been under the excruciating burden of subsidising the sector as producers who do not get paid for the electricity we generate; we put on the grid and it is consumed on the grid.”
When electricity generation and supply was unbundled over a decade ago and privatised, no sensible person would have thought that the Federal Government that often talks about the role of the private sector in the growth and development of the country would contribute to strangulating electricity, a major source of industrialisation, manufacturing and entrepreneurship. Lack of due process and accountability is writ large on this indebtedness.
We call on the government to pay up the debt quickly. According to the minister, the government would pay N2 trillion by December! Even so, this is a national scandal.
