₦airaland Forum

The Federal Government said it is taking necessary steps to offset the N4.7tn debt owed to power generation companies to avert a possible nationwide blackout.

This came as stakeholders expressed fears that some power generation companies might be forced to shut down due to a lack of liquidity in the sector unless there is an urgent intervention by the Federal Government to clear the debts to Gencos.

However, the Federal Government said it would do everything possible to prevent Gencos from shutting down their plants as the issue is getting attention.

In an interview with our correspondent, the Minister of Power, Adebayo Adelabu, assured Nigerians that the government would take action to prevent power plants from shutting down as a result of financial crises.


Speaking through his media aide, Bolaji Tunji, the minister disclosed that efforts are ongoing to pay the power generation companies and the gas suppliers.

Faced with N4.7tn debt, our correspondent gathered that generation companies are facing challenges in running their power plants.

Our correspondent gathered that gas-fired thermal plants are mostly affected as they are unable to pay gas companies supplying them with feedstock.


Recently, Transcorp Power lamented that it was being owed about N650bn for the power it generated, saying the lack of liquidity affected its ramp-up plans.

In December 2024, it was reported that gas companies formally notified all Gencos of their planned suspension of gas supply due to mounting debts. However, the intervention of the Federal Government appeared to have saved the country from another darkness like the one witnessed in the first quarter of 2024.

Sources in the power sector told our correspondent that generation companies are struggling to make ends meet, following the Federal Government’s failure to clear the N4.7tn debt.

The sources, who preferred not to be mentioned due to the matter’s sensitivity, disclosed that some Gencos declare profits in anticipation that the Federal Government would pay the money but the debt had continued to increase by the day.

Our correspondent gathered that at the end of every month, over N200bn is added to the debt burden owed to the Gencos.

According to a document sighted by our correspondent, the total invoice from January to December 2024 was N2.7tn, out of which N762.1bn was paid, leaving an outstanding of N1.94tn.

This indicates that the Gencos were only able to recover 28.18 per cent of their total debt for the first 11 months of 2024.


For instance, in January 2024, Gencos’ invoice was N281.33 but only 33.80 per cent was paid. In February when the invoice read N208bn, the Gencos received 9.3 per cent. From January to December 2024, the trend continued and the debts piled up daily.

Operators who pleaded anonymity stated that though some Gencos like Transcorp and Geregu declared profits at the end of the year, the money was being held on to by the Federal Government.

“People say we make money and they are always quick to mention two generation companies. But if you have sold your goods and the money is not coming to you, how will you break even? You make sales but the debtor refuses to pay. That’s the challenge Gencos face,” an operator said.

Another source added that generation companies are at the mercy of the Federal Government.

“We are making profits in the expectation that the government will pay us, even without any clear line of sight on payment options. As of December 2024, N4tn is owed to Gencos. The government has refused to pay electricity subsidies,” he stated.

The operators feared that if nothing is done urgently, many power plants might stop running or be denied access to gas supply to avoid incurring more debts.

Some wonder how the Federal Government plans to offset the debt with a budget of N900bn for the sector.

“Gencos are only struggling, we don’t know how the government will clear the N4.7tn debt with a budget of N900bn. I just pray Nigeria will get it right. But sustainability is not possible without money,” another source stated.


However, the minister of power, Adelabu, through his media aide, said the issue is currently getting the required attention, promising that all the players in the value chain will be paid.

“We are always intervening. I can assure you that no power plant will shut down; nothing like that will happen because of the effect of that on the economy.

“The minister has already made a case for them for the government to pay the outstanding and the legacy debt. The government will not allow things to get to where the Gencos will now say they can no longer generate electricity.

“Both Gencos and gas suppliers; all the value chain (will be paid). The government will not allow anything to happen that will cause a problem for the economy,” he said.

Speaking with our correspondent recently, the Chief Executive Officer of the Association of Power Generation Companies, Dr Joy Ogaji, disclosed that the Gencos are suffering, and they need urgent and pragmatic solutions to ease their liquidity crisis, stressing that the liquidity crisis is N4.7tn.

“As for liquidity, Gencos are seriously suffering and urgently need pragmatic solutions to ease the liquidity crisis, totalling N4.7tn,” Ogaji stated.


The President and Group Chief Executive Officer of Transcorp Plc, Owen Omogiafo, lamented that Transcorp Plc as a group has an installed capacity of 2,000 megawatts, but it is currently generating about half of that due to illiquidity.

“For Transcorp Plc as a group, our installed capacity is 2,000 megawatts but available capacity today is about a thousand of that. Why? Is it because we don’t want to put in more? Is it that we don’t have the wherewithal to increase that? No!

“But when you look at the liquidity challenges that we’re facing, it’s interesting to know that Transcorp Group alone is owed about N650bn by the government.

“We’re owed about N650bn from the power that we’ve generated. So, if you look at it as an investor, I want to be able to do more. I want to run a sustainable business. But at the same time, we need to be able to ensure that there’s liquidity, and the money is coming back so I can continue to reinvest,“ Omogiafo said during a TV interview recently.

The minister of power had earlier confirmed that the Federal Government owed electricity generation companies and electricity distribution companies over N4tn.

Giving a breakdown, the minister said N2tn was owed to Gencos as legacy debt and another N1.9tn was owed to them as part of electricity subsidy for 2024. He disclosed that the Discos were owed N450bn for the 2024 electricity subsidy.

Adelabu had said in February, “One of the major issues that concerns me is the huge debt in the sector. We are talking about legacy debt, which is across the board, over N2tn, and we still have an unpaid subsidy for 2024; we have another N1.9tn owed to them as part of electricity subsidy for 2024, while Discos are owed N450bn for 2024 electricity subsidy.

“How do you expect the Gencos to perform optimally? How do you expect them to pay for gas, services, and maintain their turbines and other infrastructure as well as pay their staff if a total of N4tn 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.”

Speaking, the Executive Director of the Association of Nigerian Electricity Distributors, Sunday Oduntan, disclosed that the failure of customers like the military and other government agencies to pay their bills is affecting the electricity value chain.

According to him, military organisations like the Air Force which attacked Ikeja Electric despite a N4bn debt pose a serious threat to the sector.

“These military and the MDAs are among the major customers responsible for the epileptic power supply we face in Nigeria. Imagine an Air Force Base alone, owing over N4bn. How do we pay the market? Our own is only 20 per cent of all the tariffs we collect. How can a generation company generate more power when the Discos are not able to remit money because they are not being paid? These are the problems. It’s a vicious cycle,” he stated

Oduntan further noted that the “Discos owe the generation companies money due to a lack of payments.”

He stressed, “Every money that accrues to the market every month goes to the Central Bank of Nigeria; then the Nigerian Electricity Regulatory Commission, everything they do is from the market, even their salary is paid from this tariff; the Transmission Company of Nigeria; the generation companies; and the gas suppliers.

“Gas suppliers are paid by the generation companies. Generation companies cannot pay the gas suppliers unless we remit upstream in the market. The debt to the Gencos rises every day. Every time you see power on, it is naira and kobo. The generation companies run their machines daily by burning gas or any other feedstock.”


Our correspondent recalls that in the first quarter of 2024, the country was plunged into darkness as gas companies refused to supply gas to the thermal plants due to debts. This was resolved after the Federal Government showed some commitment to pay in on the debts.

Source: https://punchng.com/Power-generators-fear-collapse-over-N4.7tn-debt

It's all embezzled, stolen money. No debt anywhere.

This Adelabu Penkele dude is incompetent, needs to be replaced with someone smart or a power-sector veteran who understands the loopholes within the system

4.7 trillion debt is essentially power subsidy debt....and half of the debt is legacy debt..ie debt owed by the rich, poor, and also by government institutions as well. (As stated in the report, an air force base owes N4 billion alone).

That's why when I say that power companies should be allowed to set prices, it is because of issues like the debt.

People here love to abuse me for stating the fact that the reason why we have issues with power supply is because our power sector is not allowed to set its prices. Because of that lack of deregulation, most of the time, we can't have good things...like 24 hour light a day...because the sector does not have the cash to pay for it.

What's even scarier is that the experts say that we need something like 15 trillion naira annually...like half our budget...every year, to fix power supply to the level that would enable it meet our needs.

Egypt that everyone loves copying now, has removed power subsides completely. And they disconnect anyone who does not pay for the power they use, rich or poor. That bit, we no wan copy.

The funny thing is that people were cheering when DISCO officals were being beaten up by the airforce people. People that owe 4 billion naira in unpaid bills to the same DISCO is who you were cheering for. And after you will complain about having no light.

Nawa

You can’t use propaganda to run a country.

If it didn’t dey. It didn’t dey.

IbnB:
It's all embezzled, stolen money. No debt anywhere.

This Adelabu Penkele dude is incompetent, needs to be replaced with someone smart or a power-sector veteran who understands the loopholes within the system

He "understands" the system...he knows every loophole, he's doing his best to "take advantage" of the loopholes...that's why he's there
The power sector itself is a loophole that people are taking advantage of! It's sad that majority of Nigerians depend on the provision of this so-called power sector and that is why they will continue to milk the people till there's nothing to give anymore! All these may still end with price increase

We are use to national grid collapsing so is not a new thing and you can't threaten us with that.

Could this be the reason we don't have light since 4 a.m?

Elon Musk is helping the giant US to stop waste and corruption. Nigerians celebrate it. 2mrw the same Nigerians will say Trump is wicked for not allowing them come to the US to ruin the US as they ruined their own country.

nairalanda1:
4.7 trillion debt is essentially power subsidy debt....and half of the debt is legacy debt..ie debt owed by the rich, poor, and also by government institutions as well. (As stated in the report, an air force base owes N4 billion alone).

That's why when I say that power companies should be allowed to set prices, it is because of issues like the debt.


People here love to abuse me for stating the fact that the reason why we have issues with power supply is because our power sector is not allowed to set its prices. Because of that lack of deregulation, most of the time, we can't have good things...like 24 hour light a day...because the sector does not have the cash to pay for it.

What's even scarier is that the experts say that we need something like 15 trillion naira annually...like half our budget...every year, to fix power supply to the level that would enable it meet our needs.

Egypt that everyone loves copying now, has removed power subsides completely. And they disconnect anyone who does not pay for the power they use, rich or poor. That bit, we no wan copy.

The funny thing is that people were cheering when DISCO officals were being beaten up by the airforce people. People that owe 4 billion naira in unpaid bills to the same DISCO is who you were cheering for. And after you will complain about having no light.

Nigeria's power generating, transmission and distribution system is outdated and will never give value for money, most gencos and transmission lines should be dismantled and used for something else.

If you studied electricity and know enough of I²R, you will know why gencos will keep on losing.

If drilling companies can efficiently run power for half of some local government onshore and offshore in far remote areas, I wonder what is so difficult and why they need to go to Egypt to study anything.

We just love bogus things in this country.


Hopeless Gencos
Useless Subsidy
Foolish minister

Tax/ electricity tariff increase... is that you knocking?...

Nigerians don't pay for nothing, yet we want everything

Benin Republic and Togo owe Nigeria $8.84m for the electricity consumed in the fourth quarter of 2024, The PUNCH reports.

Can they collect this money and use it to offset the debt

adenigga:
Source: https://punchng.com/Power-generators-fear-collapse-over-N4.7tn-debt

What happens to all of the money stolen. Everytime govt talked as if the bulk of this stops with the consumers, however the truth is that even most of the fees paid by consumers even for services never rendered them because of estimated billing were never remitted but embezzled.

IbnB:
It's all embezzled, stolen money. No debt anywhere.

This Adelabu Penkele dude is incompetent, needs to be replaced with someone smart or a power-sector veteran who understands the loopholes within the system

See how ugly and froggie face the adelabu guy be , he knows nothing about electric power, all he knows is to increase so tinubu will have more money

Proudlyngwa:
Nigeria's power generating, transmission and distribution system is outdated and will never give value for money, most gencos and transmission lines should be dismantled and used for something else.

If you studied electricity and know enough of I²R, you will know why gencos will keep on losing.

If drilling companies can efficiently run power for half of some local government onshore and offshore in far remote areas, I wonder what is so difficult and why they need to go to Egypt to study anything.

We just love bogus things in this country.


Hopeless Gencos
Useless Subsidy
Foolish minister

Which is kind of why, y'know, discos and gencos should charge at market prices, so that they can raise the funds for replacing outdated stuff.

nairalanda1:
4.7 trillion debt is essentially power subsidy debt....and half of the debt is legacy debt..ie debt owed by the rich, poor, and also by government institutions as well. (As stated in the report, an air force base owes N4 billion alone).

That's why when I say that power companies should be allowed to set prices, it is because of issues like the debt.

People here love to abuse me for stating the fact that the reason why we have issues with power supply is because our power sector is not allowed to set its prices. Because of that lack of deregulation, most of the time, we can't have good things...like 24 hour light a day...because the sector does not have the cash to pay for it.

What's even scarier is that the experts say that we need something like 15 trillion naira annually...like half our budget...every year, to fix power supply to the level that would enable it meet our needs.

Egypt that everyone loves copying now, has removed power subsides completely. And they disconnect anyone who does not pay for the power they use, rich or poor. That bit, we no wan copy.

The funny thing is that people were cheering when DISCO officals were being beaten up by the airforce people. People that owe 4 billion naira in unpaid bills to the same DISCO is who you were cheering for. And after you will complain about having no light.

I have always campaigned for all forms of subsidies in the power sector should be removed. But if you are removing it,let the people that will remove it also be responsible. I cant be paying through my nose for power and I will be the one to still fix transformer buy transformer or buy poles etc. You take charge 100percent.

I branched to my local Nepa office last week to pick up my bill and I was amazed with what I saw. People owing Nepa bill of over 200K and above. Because we both searched for my bill together and I could see other people's bill.

But can you blame them? Absolutely not. Those are estimated billings and you dont want me to pay for what I dont use. There are still many many areas where there is no light for days and weeks. Yet Nepa still brings estimated billing for them. We just did 2weeks of no power recently.

My opinion has been. Truly privatise the sector and not this rubbish we are currently doing. Remove all forms of subsidies there and let serious investors come in..

We are not a serious country if we are still battling power problem all these years. It makes absolutely no sense

happney65:
H

I

They have always wanted to increase the tarrifs of band B & C. They are gradually preparing the minds of the people fore the hike.

nairalanda1:
Which is kind of why, y'know, discos and gencos should charge at market prices, so that they can raise the funds for replacing outdated stuff.

Charging at market price is okay, but they are putting the price of inefficiency on Thier products knowing they are the only suppliers.

Imagine a 300 KVA generator serves a community, the rarely have light not because they can't pay but because they can't all pay.
So for them to constantly have light someone has to pay for someone that is the stupidity of Nigeria's power generation and transmission model.
Now imagine an estate on 3 300 KVA generator connected by VFD when more power is required the engine ramps up, when it goes beyond the capacity of one gen, the second gen comes up, after a predetermined time one gen shuts down and the third gen comes on and that gen can be serviced . If much power is not needed the gen runs on near idle mode. Only those who can afford the true value are hooked up , this is how drilling rigs operate.

The problem with our current model is , it is too bogus, much power is lost via transmission and distribution is unbalanced so how can they make money

Proudlyngwa:
Charging at market price is okay, but they are putting the price of inefficiency on Thier products knowing they are the only suppliers.

Well, one could say the same thing about our telecoms industry from 2001-8. They charged high prices for very poor service, simply because the infrastructure was not there or was very poor to support GSM servicies and internet for all (infact it was non existent, so they had to build from scratch).

The power sector faces the same problem. Generation has to be improved and expanded to 88000mw...which is the bare minimum needed to guarantee 24 hours a day light for all of this country. Transmission has to be improved.

And a situation where , apart from Band A, most of the country is not paying or underpaying...where are they going to get the money from?

Either Nigeria does as the USSR did and borrows massively,with the debt coming back to bite us in the arshe, or the power sector gets deregulated, like, you know, Ivory coast did in the early 1990's, with the result that funding flowed in from the World bank and from investors. (IN Ivory coast, unless you are over 40 years of age, you won't have known grid collapses).

They need to charge better to pay for improvements, just as the telcos were charging sky high prices to pay for the GSM and internet backbone that we rely on for so many things.

Imagine a 300 KVA generator serves a community, the rarely have light not because they can't pay but because they can't all pay.
So for them to constantly have light someone has to pay for someone that is the stupidity of Nigeria's power generation and transmission model.
Now imagine an estate on 3 300 KVA generator connected by VFD when more power is required the engine ramps up, when it goes beyond the capacity of one gen, the second gen comes up, after a predetermined time one gen shuts down and the third gen comes on and that gen can be serviced . If much power is not needed the gen runs on near idle mode. Only those who can afford the true value are hooked up , this is how drilling rigs operate.

The problem with our current model is , it is too bogus, much power is lost via transmission and distribution is unbalanced so how can they make money

They are prevented from making more money by the fact that government controls their prices.

Price controls is a nice way of winning votes, and making people feel good, but it is also why our power sector since it was privatised cannot pay for improvements and attract foreign investments.

Make we be honest with ourselves. Even if what you say is right, the issue of raising money remains. And government cannot afford to spend half our annual budget yearly , with the resultant deficit, over the next ten years, fixing power, which would still be subsidised, and which would still break down.

Fvck capitalism, but sadly it stays afloat because people wanna be paid.

happney65:
I have always campaigned for all forms of subsidies in the power sector should be removed. But if you are removing it,let the people that will remove it also be responsible. I cant be paying through my nose for power and I will be the one to still fix transformer buy transformer or buy poles etc. You take charge 100percent.

I branched to my local Nepa office last week to pick up my bill and I was amazed with what I saw. People owing Nepa bill of over 200K and above. Because we both searched for my bill together and I could see other people's bill.

But can you blame them? Absolutely not. Those are estimated billings and you dont want me to pay for what I dont use. There are still many many areas where there is no light for days and weeks. Yet Nepa still brings estimated billing for them. We just did 2weeks of no power recently.

My opinion has been. Truly privatise the sector and not this rubbish we are currently doing. Remove all forms of subsidies there and let serious investors come in..

We are not a serious country if we are still battling power problem all these years. It makes absolutely no sense

Well, in 2001-5 we all paid through our noses for GSM services that in many ways were batshit poor, and did not reach everyone. (Why Nigerians have two GSM Lines is not because of show or because we are rich, but because in the early days, one could not call between networks, or call a NITEL Landline ).

The money was used to pay for improvements and to attract more investment. Today, I can call oversease, call any village in nigeria, and use internet in most urban and even many rural areas. That was not possible in 2003.

Here in NIgeria, most of us refuse to pay for power at all, or underpay, due to price controls, and also deliberately. (My disco has a lot of rural areas where people pay N2000 for power, even if they used 20000 worth of power that month). That's why they rip us off via estimated billing....they have to do that or their financial situation would be worse.

Also, on Nigerians paying for wires and transformers. Over 30 years ago, I was attending a primary school where my parents paid fees of N250 per term. The school was over 16 kms from our house...so imagine the fuel costs. There was a government school that was costing fees of N50 or less within a shouting disitance from my house..

Students attending the government school had to buy books, buy desk and buy pencils and pens. We in the private school...got books, pens and pencils and desks. If a book finished, we simply went to the school store and got a new one straight up. Only once did I have to go and buy a new book...because the school stores supplier had been delayed and the stores were empty. Once in my 6 years of attending that school.

So, why won't your power company be making you buy stuff. Most of us are not paying market price for power, so they cannot make the profit to pay for those things.

Life.

nairalanda1:
4.7 trillion debt is essentially power subsidy debt....and half of the debt is legacy debt..ie debt owed by the rich, poor, and also by government institutions as well. (As stated in the report, an air force base owes N4 billion alone).

That's why when I say that power companies should be allowed to set prices, it is because of issues like the debt.

People here love to abuse me for stating the fact that the reason why we have issues with power supply is because our power sector is not allowed to set its prices. Because of that lack of deregulation, most of the time, we can't have good things...like 24 hour light a day...because the sector does not have the cash to pay for it.

What's even scarier is that the experts say that we need something like 15 trillion naira annually...like half our budget...every year, to fix power supply to the level that would enable it meet our needs.

Egypt that everyone loves copying now, has removed power subsides completely. And they disconnect anyone who does not pay for the power they use, rich or poor. That bit, we no wan copy.

The funny thing is that people were cheering when DISCO officals were being beaten up by the airforce people. People that owe 4 billion naira in unpaid bills to the same DISCO is who you were cheering for. And after you will complain about having no light.

How can 4.7tr naira be subsidy debt?

What is subsidy?

If you claim that half of 4.7tr is owed by government agencies, what happened to the money meant to pay for electricity consumed?

Will electricity companies setting their own tariffs to the high heavens prevent the military from owing and using free light?

Useless country, industries now install solar🤷

lexy2014:
How can 4.7tr naira be subsidy debt?

What is subsidy?

If you claim that half of 4.7tr is owed by government agencies, what happened to the money meant to pay for electricity consumed?

Will electricity companies setting their own tariffs to the high heavens prevent the military from owing and using free light?

Hi Lexy, you are looking very beautiful this morning.

Hope your preparation for the MIss Nigeria contest is going on successfully. Good luck and I hope you win.

nairalanda1:
Hi Lexy, you are looking very beautiful this morning.

Hope your preparation for the MIss Nigeria contest is going on successfully. Good luck and I hope you win.

So are you.

Hope your preparation for the MIss Nigeria contest is going on successfully. Good luck and I hope you win.

How can 4.7tr naira be subsidy debt?

What is subsidy?

If you claim that half of 4.7tr is owed by government agencies, what happened to the money meant to pay for electricity consumed?

Will electricity companies setting their own tariffs to the high heavens prevent the military from owing and using free light?

adenigga:
Source: https://punchng.com/Power-generators-fear-collapse-over-N4.7tn-debt

All the tarrif Una Dey increase without giving us light, what have you been using them for ?

lexy2014:
So are you.

Hope your preparation for the MIss Nigeria contest is going on successfully. Good luck and I hope you win.

I am not a beauty queen. You are.

How can 4.7tr naira be subsidy debt?

What is subsidy?

If you claim that half of 4.7tr is owed by government agencies, what happened to the money meant to pay for electricity consumed?

Will electricity companies setting their own tariffs to the high heavens prevent the military from owing and using free light?

If you want to keep something from Lexy, put it in writing.

IbnB:
<sup>It's all embezzled, stolen money. No debt anywhere.

This Adelabu Penkele dude is incompetent, needs to be replaced with someone smart or a power-sector veteran who understands the loopholes within the system</sup>

ceejay80s:
^{See how ugly and froggie face the adelabu guy be , he knows nothing about electric power, all he knows is to increase so tinubu will have more money}

Sir's, your assumptions are correct.

--------

Houseontherock1:
^{He "understands" the system...he knows every loophole, he's doing his best to "take advantage" of the loopholes...that's why he's there}

Sir, a coward dies a thousand times before his death
--------
NOTES.
1. The minister of power is an accountant, that miraculously became deputy governor CBN. Prof Barth Nnaji is a square peg in a square hole.
2. In the last elections he ran in the gubernatorial primaries for Oyo state ; under APC.
3. Power sector as of today is riddled with debt, and held by the jugular by Pacific Energy. Adelabu is there to protect the "interest" of few.
4. Every time you feel the brunt of epileptic power - think Pacific Energy; Deji Adeleke.
5. Yes, David Adeleke's father is a tsar in the energy sector, his holdings benefit from the epileptic power supply in our dear country.
6. 41 trillion naira debt; Pacific energy receives loans, tax credit, and other benefits from banks to give us epileptic power. It is akin to pouring water in an attempt to fill a basket.
7. Pacific energy is the reason; El-Rufai was humiliated by Sen. Sunday Karimi - a pro-Tinubu pawn, and serial defector who justified N160,000,000 SUV purchases in the senate.
8. Pacific energy is the reason Tinubu turned around "changed his mind" on the agreement with El-Rufai - where El-Rufai would work on the power industry.
9. El-Rufai would systematically disassemble Pacific Energy. Going by his antecedents with BPE (bureau of public enterprises) See El-Rufai vs Chief Adenuga (GLO).