FG Set to Create New Electricity Subsidy Program Amid N4trn Electricity Debt
- FG announced that, in response to growing debt to power utility companies, it is creating a new electricity subsidy program
- The power minister, Adebayo Adelabu, criticised the effect that electricity subsidies are having on public finances
- According to him, the country ought to reconsider the electricity subsidy scheme in the area that would help the underprivileged
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Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
The federal government has stated that it is developing a new electricity subsidy scheme in the face of growing debt to power utility firms.
Source: UGC
Adebayo Adelabu, the minister of power, criticised the impact that electricity subsidies are having on government coffers and stated that the nation should reexamine the model of electricity subsidies in the sector that would benefit the poor.
Speaking at the 6th edition of the 2025 Ministering Briefing, the minister added that if the debt owing to the electricity industry is not paid off, the nation is sitting on a keg of gun powder
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According to Daily Trust, the amount of N4 trillion in unpaid subsidies owing to Generation Companies has accumulated, according to Daily Trust.
The Minister said that the increase in the amount of debt due to electricity providers was caused by the government's irregular payment of subsidies.
“Government cannot, after privatisation, continue to keep the funding subsidy, which keeps growing on an annual basis. As our consumption goes up, government subsidies keep growing. So we need to nip it in the bud. We are not saying stop subsidies completely but subsidies in the past have always been favouring the higher echelon in our society because of huge consumption. We want to devise a subsidy strategy that will favour the poor.
“So, we are talking to ourselves to make sure that we pay this subsidy and for it not to cost the government too much money, because a lot of other ministries are begging for resources. We all know that the price of oil is going down and production is not improving. So, we can see that government resources, too. We are not so optimistic about the growth in government resources. So, the government must be able to reduce the subsidy,” he said.
He asserts that every effort must be made to pay off the N4 trillion in debt.
He said,
“For 2024 alone, it was N1.94 trillion. If not for the Band A increase, it would have been N3tr. From 2015 to 2023, it was N2tr, N2tr plus another N1.94tr in 2024, that is N3.94tr. That is N4tr debt. If you have not paid for a good power supply, how do you expect them to supply new goods? So, we are sitting on a keg of gunpowder. If we do not start paying down the debt, the old debt that is unfunded subsidy. So, we need to do everything possible to ensure that we pay the debt so that the nation will not going into darkness.”
However, Adelabu stated that the government is making every effort to reduce the debt and that N2 trillion will be paid in cash and bank guarantees before the year ends.
Earlier, the GenCos threatened to cut off the electrical supply this week due to the mounting debt. The GenCos are in severe financial circumstances as a result of receiving fewer than 40% of their invoices.
Mistake in privatising DisCos?
The minister said that the nation erred in granting Electricity Distribution Companies (DisCos) to private citizens who are abusing the businesses without making sufficient investments.
“On the issue of investments, our power operators are not investing. We made that mistake in 2013, when we did the privatisation. All the Distribution Companies have not injected enough into the sector. They are only milking these companies, so we must do a lot of investment. Governments cannot do it alone. So, we need a lot of investment. These are the challenges that we are working around.”
Source: UGC
He added that the government is using the electricity super grids to regionalise the power grid.
According to the minister, the eastern and western super grid projects are moving forward and will lower grid payloads.
“We have said that what Nigeria needs today is a regional or regionalisation of the national grid, so that there is a problem in one part of the country. It will not affect other parts. Having a single national grid that will be done 100% is not desirable. So, we are taking steps to make sure that we regionalise this grid to not affect the eastern and western super grids. This project is on and we hope to have a favourable reference as soon as we come back from Easter break.
Additionally, he stated that before 2027, the government will ensure that the system reached 8,000 megawatts.
Nigeria reportedly cuts electricity to Niger Republic
Legit.ng reported that Nigeria has reduced its electricity exports to Niger Republic from 80 megawatts to 46 megawatts, marking a 42 per cent reduction in power supply, Channels TV reported.
In reaction, Niger’s Energy Minister, Haoua Amadou, confirmed that this measure has led to a 30 to 50 per cent decline in the country's electricity production, forcing the state-owned power company, Nigelec, to impose planned power cuts.
Some outages have lasted several days, particularly in the capital, Niamey.
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Source: Legit.ng
