FG Reveals N4 Trillion Debt to GenCos, DisCos

The Nigerian Federal Government (FG) has disclosed that it owes electricity generation companies (GenCos) and distribution companies (DisCos) over N4 trillion in debt.

Adebayo Adelabu, the Minister of Power, made this revelation during the recent public presentation of the National Integrated Electricity Policy (NIEP) and Nigeria Integrated Resource Plan (NIRP) in Abuja.

Adelabu explained that the government’s debt to GenCos exceeds N2 trillion, while an outstanding unpaid subsidy for 2024 amounts to N1.97 trillion.

FG subsidy debt to Gencos and Discos

Additionally, the FG owes DisCos N450 billion for electricity subsidies accrued in 2024. These debts highlight the financial challenges facing Nigeria’s power sector.

“One of the major issues concerning liquidity is the huge debt in the sector. We talk about legacy debt to GenCos of almost over 2 trillion and we have an outstanding unpaid subsidy for 2024 of 1.97 trillion. DisCos are owed N450 billion for 2024 electricity subsidy.

“How do you expect the GenCos to perform optimally? How do you expect them to pay for gas, service, and maintain their turbines and other infrastructure as well as pay their staff? If a total of over N4 trillion is being owed to them.

“I do not deceive myself. The government cannot afford to continue to fund the level of subsidy that our consumption pattern is throwing up. Because we have seen increasing consumption of electricity. As consumption increases, government subsidy also increase.

“Because we have seen an increase in consumption of electricity. As consumption increases, government subsidy also increases. There must be a finite subsidy regime that can be targeted at those that truly desire to be subsidised. So we are working on something like that.

“The key issues are the market, liquidity, and sector reforms. We’ll continue to focus on that. We’ll look at the tariff again. I am not saying that we are going to increase the tariff but to look at the tariff and see how we can improve upon our modest achievement of last year.”
he said.

The Minister also noted that over 60% of manufacturing firms have disconnected from the national grid and are now relying on self-generation of electricity. This shift has significantly increased production costs, which in turn affects the prices of goods produced by these firms.

Adelabu emphasised that for the power sector to contribute effectively to economic growth, industrialisation, and national development, there must be a reliable grid supply. He stressed the need to encourage companies currently off-grid to return to the national grid, as this would reduce their production costs and help curb inflation.

“This is not because they are in rural areas or they are in semi-urban areas. They are in locations where there is access to electricity. But how reliable is this access? We all know that there are lots of sensitive manufacturing processes that cannot tolerate a one-minute beep in electricity supply. Instead of taking such a risk by connecting to a grid that is not reliable, these industries would rather go for self-generation. And we know the impact of this.

“It is not cheap. It is very, very expensive. Therefore, our products or commodities being churned out from these factories can never be competitive.

“So like I always say that the power sector is an enabling sector. It’s a strategic driver sector for other critical sectors in the economy. So this reinforces our commitment to delivering a more reliable, sustainable, and inclusive energy future for all Nigerians,” he added.

Purpose of FG NIEP and IRP

The National Integrated Electricity Policy (NIEP), according to him, will serve as the guiding framework for Nigeria’s power sector, ensuring that journey towards universal electrification is evidence-based, pragmatic, and aligned with our energy transition goals.

He also explained that the Integrated Resource Plan (IRP) is a strategic roadmap that prioritizes least cost electrification and an optimized energy resource utilization. “Collectively, the National Integrated Electricity Policy and the Integrated Resource Plan present a unique opportunity to drive the transformation of Nigeria’s power sector through a data-driven and evidence-based approach beyond strengthening the sector.

“These frameworks have far-reaching economic implications, directly impacting supply reliability to small and medium-sized enterprises and large industries, while reducing operational disruptions caused by power shortages, fostering economic growth and job creation, and accelerating local and regional development.”

In her remarks, Sally Woolhouse, Head of Economic Development at the Foreign, Commonwealth and Development Office (FCDO), said the UK government has supported the Nigeria Power Sector with about £200 million.

Woolhouse noted that the UK Nigeria Infrastructure Advisory Facility (UKNAIF), has been the vanguard of providing technical advisory support to state and federal government ministries, Departments and agencies in Nigeria’s electricity value chain.

She added that the shift towards work in state electricity markets presents new opportunities in the power sector.

She noted that “It should be obvious to everyone that the UK and Nigeria enjoy a longstanding relationship and we are proud to continue supporting first class infrastructure development that leads to sustainable economic growth and also helps us build mutually beneficial strategic partnership for both of our countries”.