• Wednesday, May 29, 2024
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FG requires N2.9trn to subsidize electricity in 2024 — Adelabu

Adebayo Adelabu, the minister of power has announced that the federal government would require as much as N2.9 trillion to subsidize electricity supply to Nigerians in 2024.

This is as he noted that the government made a provision for only N450 billion in the 2024 budget.

“What we have made provision for in the 2024 budget for subsidy is N450bn and we will require N2.9 trillion for subsidy. So can we afford it? We must be realistic. Can we afford it? N450 billion is less than 20 percent of the almost N3 trillion that is required for subsidy if we must continue at the current price. So these are things that we need to decide on as a nation.”

The minister, who spoke at a press conference in Abuja, which also had the heads of all the agencies under the Federal Ministry of Power in attendance, however, insisted that he would not resign his position as power minister following calls for his resignation by some persons.

He said, “today, we are owing a total of N1.3tn to the power generating companies (GenCos), out of which 60 per cent is being owed to gas suppliers. Today we have a legacy debt, prior to 2014, to the gas companies of $1.3bn; at today’s rate, that is close to N2tn.

“Now if you add N2 trillion legacy debt owed gas companies and the N1.3trillion being owed the Gencos, we have an inherited debt of over N3trillion in this sector. How will the sector move forward? Nigerians deserve the right to know this.

“However, we are working underground to make sure that we resolve these issues and pay these debts either through cash injections or through guaranteed debt instruments to ensure the continuity in the generation of power.”

Speaking on the power shortages recently experienced across the country, the minister said, “what happened in January was that the gas companies that have been managing to supply gas to generating companies decided to ask for their money by saying ‘we are not supplying gas until you pay your debts.’ If I was in their shoes, would I not do the same thing.

“There have been multiple simple technical operational problems across all segments in the value chain, but made complicated by lack of sustainable liquidity and infrastructure funding, as well as structural misalignment.

“The simple technical operational issues are inadequate shortage of gas supplies and aging dilapidated generation machineries causing below optimal capacity utilisation and short supply by the Gencos.

“Inadequate power evacuation capacity at Genco locations, coupled with unstable and fragile transmission lines, devoid of automated frequency controls, lacking in back-up capacity with frequent human disturbances through vandalism and theft,” Adelabu stated

He however disclosed that efforts were ongoing to ensure settlement of existing sectoral outstanding debt obligations to the gas supply and power generation companies using partly cash payment and guaranteed debt instruments.

He said, “a national discourse on the nation’s perspective to electricity supply, whether it is a commercial product or social service. There must be an agreement across divides on how we define electricity.

“Depending on the outcome of the above, it is either the implementation of a cost reflective tariff or a cashed backed Federal Government guaranteed subsidy funding regime to inject liquidity into the sector.

“We have to encourage distributed power strategy in conjunction with sub-national government focussing on embedded power model to reduce pressure on the national grid, and to ensure alternative electricity supply to DisCos.”