The Minister of Power, Adebayo Adelabu, has warned that Nigeria’s economy can no longer sustain electricity subsidies, urging Nigerians to brace for cost-reflective tariffs across the board.
Naija News reports that Adelabu spoke during a meeting with the Chairmen of Power Generating Companies (GenCos) in Abuja, where he also disclosed plans to settle part of the ₦4 trillion debt owed to the GenCos.
“We have to understand that our economy cannot sustain subsidies indefinitely,” he said, adding that “citizens must pay the appropriate price for the energy consumed.”
He, however, noted that the Federal Government remains committed to providing targeted subsidies for “economically disadvantaged Nigerians,” although he did not define what qualifies an individual for that category.
Subsidy Gap and Tariff Realities
According to a recent report by the Nigerian Electricity Regulatory Commission (NERC), Nigerians currently pay an average of ₦88.2 per kilowatt hour (kWh) while the actual cost stands at ₦116.18 per kWh.
This leaves a deficit of ₦27.97 per kWh, which is borne by the government as a subsidy.
Only 15 per cent of electricity customers, primarily those on Band A, are not benefiting from the subsidy.
FG Plans Promissory Notes for Debt Repayment
The Minister explained that the Federal Government is working on a payment plan involving both cash and promissory notes to offset a “substantial portion” of the over ₦4 trillion debt owed to GenCos.
“There is a need to pay a substantial amount of the debt in cash. At the minimum, let us pay a large chunk, then issue promissory notes for the rest,” Adelabu stated.
He added that a high-level meeting between President Bola Tinubu and the leadership of the GenCos is being scheduled to finalise the proposal.
Earlier in the meeting, the Chairman of Mainstream Energy Solutions, Col. Sani Bello (retd.), warned that the power sector was on the brink of collapse due to severe liquidity constraints.
“Without urgent intervention, the entire power ecosystem could collapse,” he warned, citing the 4 trillion nair backlog as a major operational bottleneck.
Kola Adesina, Chairman of Egbin Power and First Independent Power Limited, echoed the concern.
“This is a national emergency. Everything hinges on power—industries, homes, hospitals. We cannot afford to let the sector fail,” Adesina said.
GenCos List Challenges: FX Volatility, Gas Supply, Taxation
The CEO of the Association of Power Generating Companies (APGC), Dr. Joy Ogaji, listed several issues plaguing the sector, including:
Chronic payment defaults
Erratic gas supply
Foreign exchange volatility
Burdensome taxes
Frequent grid failures
Ogaji noted that the sharp depreciation of the naira—from ₦157/$1 in 2013 to over ₦1,600/$1—has wiped out maintenance budgets and crippled GenCos’ ability to repay loans.
“GenCos have borne unsustainable risks while remaining patriotic,” she added.