Minister of Power, Adebayo Adelabu, has vowed to address the 4 trillion naira electricity debt owed to electricity generating firms. This comes after GenCos threatened to shut down on Monday due to a worsening financial crisis in the electricity market.
The firms, under the Association of Power Generation Companies, disclosed this in a statement signed by the chairman of the board trustees on Monday.
According to GenCos, the debt burden and operational constraints will lead to a nationwide blackout if the government doesn’t intervene. They noted that plants were paid less than 30 percent of monthly invoices for power supplied to the national grid.
They continued that outstanding debts now exceed 4 trillion naira and 1.9 trillion naira in legacy debts. The group added that there is the absence of firm contracts despite investing significantly in distributing power since its privatization in 2013.
Also, there is no hope of being settled through external support mechanisms due to failure to meet required performance targets.Furthermore, the stakeholders warned that nonpayment for electricity generated will cause the Nigerian power sector to collapse.
In light of this, the stakeholders urged the government to take immediate and expedited action to prevent national security challenges. They noted that failure to take action will lead to an inability to sustain a steady generation of electricity for Nigerians.
As a result, the government has promised to take concrete steps to resolve the issue to avoid nationwide blackouts. According to the special adviser to the Minister of Power, Bolaji Tunji, Adelabu is concerned about the implications of these debts towards the power sector stakeholders, especially GenCos.
He noted that the issue has been discussed with the Ministry of Finance with the expectation to take action on the issue. Conclusively, the President of Nigeria, Bola Tinubu has planned to support the sector with cash backing to settle the liquidity crisis.
