A staggering N4 trillion debt burden is crippling Nigeria’s power sector, prompting manufacturers to abandon the national grid and raising serious concerns about the nation’s economic stability. Adebayo Adelabu, Minister of Power, revealed the alarming figures during the public presentation of the National Integrated Electricity Policy (NIEP) and Nigeria Integrated Resource Plan (NIRP) in Abuja, highlighting a crisis that extends beyond mere financial shortfalls.
“One of the major issues concerning liquidity is the huge debt in the sector,” Adelabu stated, detailing over N2 trillion owed to electricity generation companies (GenCos), a N1.97 trillion unpaid subsidy for 2024, and N450 billion owed to distribution companies (DisCos) for electricity subsidies. This colossal debt, as I see it, isn’t just a number; it’s a barrier to progress. How can GenCos maintain vital infrastructure and pay their staff when they are owed such substantial sums?
The ripple effects of this financial strain are palpable. More than 60% of manufacturing firms, even those in areas with grid access, have opted for self-generation due to the unreliability of the national grid. “We all know that there are lots of sensitive manufacturing processes that cannot tolerate a one-minute beep in electricity supply,” Adelabu explained. “Instead of taking such a risk by connecting to a grid that is not reliable, these industries would rather go for self-generation.” This shift, while ensuring operational continuity for manufacturers, significantly inflates production costs, rendering Nigerian products less competitive.
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From my perspective, this exodus from the national grid is a symptom of a deeper malaise. The inability to provide consistent and reliable power undermines the very foundation of industrial growth. The human angle here is profound: businesses are forced to choose between operational efficiency and financial viability, leading to increased costs that ultimately burden the average Nigerian consumer.
The Minister acknowledged the unsustainable nature of current subsidy levels, noting, “The government cannot afford to continue to fund the level of subsidy that our consumption pattern is throwing up.” He proposed a targeted subsidy regime, aiming to support those who truly need it, while also hinting at a re-evaluation of electricity tariffs. “We’ll look at the tariff again…and see how we can improve upon our modest achievement of last year,” he said.
The NIEP and NIRP are designed to provide a data-driven framework for addressing these challenges. As Adelabu emphasized, these policies aim to “drive the transformation of Nigeria’s power sector through a data-driven and evidence-based approach.” The goal is to create a reliable, sustainable, and inclusive energy future, fostering economic growth and job creation.
However, the question remains: can these policies effectively address the immediate liquidity crisis and restore confidence in the national grid? The implications are far-reaching. Reliable power is not just about keeping the lights on; it’s about enabling businesses to thrive, creating jobs, and ensuring that Nigerian products can compete in the global market.
The government’s commitment to reforming the power sector is clear, but the path forward requires decisive action and sustained effort. As I reflect on this situation, it’s evident that resolving the N4 trillion debt crisis is not merely an economic imperative; it’s a crucial step towards building a more prosperous and resilient Nigeria.
