N4 trillion debt: FG mentions date to pay 50%, gives details of tariff review
- The federal government has finally taken action on the outstanding N4 trillion debt owed to GenCos and DisCos
- The minister of Power outlined plans to pay half of the money in cash within the next eight months
- The minister also hinted at a tariff review, saying that it was no longer sustainable for the government to bear 70% of energy costs
Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
For weeks, power sector conversations have dwelt on the humongous N4 trillion debt the federal government owes the electricity generation companies and distribution companies in Nigeria.
Chairman of Transcorp Energy, Tony Elumelu, had lamented during an investor forum last week that the N600 billion owed to the company had become a heavy burden.
Earlier this week, electricity generating companies also threatened to shut operations as the debt had crippled their operations.
Source: Twitter
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The federal government has finally responded to the matter.
FG mentions date to pay 50% of GenCos' debt
The minister of Power, Adebayo Adelabu, gave a breakdown of the government’s plan to pay half of the debt before the end of 2025, according to the PUNCH.
Speaking at the sixth edition of the 2025 Ministerial Press Briefing Series on Thursday, April 17, in Abuja, Adelabu said the debt would be paid in cash and promissory notes so that the GenCos can keep their operations up.
Adelabu noted that discussions are ongoing with the minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, to settle the debt through either budgetary allocation or guaranteed instruments like promissory notes.
He explained that with the promissory notes, the GenCos can present them to the bank and get the cash they need to meet their financial obligations.
FG speaks about steps to prevent further debt
Speaking further about the debts, the minister said that a tariff review is imminent, given the rising cost of generating and supplying energy.
He noted that much of the debts were accumulated from subsidy costs, and it is no longer sustainable to keep at it.
Adelabu explained that the average energy cost of 1 kilowatt was N170, but up till last year, 85% of Nigerian customers were paying N60 while the government had to pay the rest as subsidies.
His words;
“Before now, about 85% of customers were paying around N60 per kilowatt-hour, while the actual cost of supplying power was about N170. Only 15 per cent of customers—mostly Band A—pay N209, and that is where there is a small margin.”
With the tariff increase for customers on Band A, the electricity subsidies were reduced by 35%, with an additional N700 billion raised in revenue in 2024.
FG hints at another tariff review
The Minister noted that even though Nigerians were not happy with the last tariff review, it was the only way to protect the viability of the power sector, as investors are not keen to invest in a sector where they are stopped from charging cost-reflective tariffs.
Explaining the tariff review, Adelabu said;
“We’re not eliminating subsidies, but we must restructure them. In the past, subsidies largely benefited high-consuming households. Now, we’re designing a system where only low-consumption users—mostly poor households—enjoy the subsidy.
“We are not on the side of the companies — we are on the side of Nigerians. But we must also face the reality that energy, like food, is expensive everywhere in the world.”
Source: Twitter
He insisted that financial viability could coexist with service delivery in the power sector, and promised that the government would maintain strong oversight.
Adelabu warned that any Disco that failed to provide 20 hours of electricity daily to customers on Band A feeders would be penalized.
Power minister calls for electricity tariff review
In related Legit.ng news, Nigeria's power sector finally hit the 6,000MW target set by the federal government.
This milestone was achieved three months after the earlier set date, and the minister attributed it to liquidity issues in the power sector.
He noted that unless an electricity tariff review was done, the power sector would not be able to achieve 7,000MW or more.
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Source: Legit.ng
