FG pays N205b owed GenCos to unlock liquidity in sector

The Federal Government has settled N205 billion out of the N1.3 trillion it owes electricity generation companies (GenCos), a decision aimed at alleviating the persistent liquidity crisis in the power sector.

The Minister of Power, Adebayo Adelabu, disclosed this during an oversight visit by the House of Representatives Committee on Power in Abuja. While addressing the lawmakers, Adelabu said the payment was part of the debt owed to various power companies.

According to Adelabu, the injection of funds is expected to improve liquidity within the power sector, enabling GenCos to meet operational costs, invest in maintenance and upgrades and increase power generation capacity.

This, in turn, could lead to a more stable electricity supply and reduced instances of load shedding, he said. Despite this payment, a substantial amount of the debt – over N1 trillion remains outstanding. GenCos continued to face financial pressures that could impact their ability to operate efficiently unless further payments were made promptly.

In May, the federal government announced N130 billion to settle part of the N1.3 trillion gas supply debts in the Nigerian Electricity Supply Industry (NESI).

Adelabu stressed that with the ongoing economic challenges in the country coupled with fuel scarcity, it is crucial to avoid a national blackout that would further strain Nigerians’ quality of life.

“Just about three weeks ago, out of the about N1.3 trillion we owe the Generation Companies (Gencos), we were able to pay them N205 billion. And they are also happy. I will plead with the members of the House Committee to help us mount pressure on the executive to continue to pay these people,” he said.

Speaking on the weak and aged infrastructure, the minister emphasised the need to upgrade the country’s power infrastructure and revisit the existing tariff policy, stressing that all aspects of the power sector require attention.

“A lot of the towers are falling. The substations are dilapidated with old transformers, some of which were installed in the 60s. We have not been able to replace them, same with the distribution infrastructure. The substations at the distribution level are also not working properly,” he said.

He, however, said the recent improvement in the supply across the country is not a result of the rainy season as hydroelectric power in the country today is just a bit over 20 per cent of the total power generated while the remaining almost 80 per cent is from gas. Hence, he noted that the improvement isn’t from rain but the intentional activities of the Federal Government through the Ministry of Power.

On the metering gap, Adelabu reiterated the ministry’s target to install two million meters yearly over the next five years, noting that the sector is now experiencing progress.

The House of Representatives Committee, Chairman, Victor Nwokolo, said there is much to be done in securing the power infrastructure in the nation as vandalism poses a major threat to sustaining the success recorded in the power supply.

He urged Nigerians to change their attitude toward public infrastructure as it is disheartening to see vandals destroy the infrastructure that is so expensive to build.