To tackle Nigeria’s power outages, President Bola Tinubu has approved a plan to pay off over N3.3tn in debts owed to the power sector.
The government will pay N1.3tn to power generating companies (Gencos) through cash and promissory notes. The payments have started and will continue over the next two to five years. Gas companies will receive $1.3bn (N1.994tn) through cash and future royalties. This aims to ensure a steady gas supply for power generation.
Chief Adebayo Adelabu, Minister of Power, shared these updates at the 8th Africa Energy Marketplace in Abuja. The plan is to stabilize the power sector and boost investment. N130bn from the Gas Stabilization Fund has already been approved for Gencos. The rest will be paid with promissory notes. The government wants to switch from ad-hoc gas supply to firm contracts, ensuring reliable gas for power generation.
The legacy debts to gas producers will be paid from future royalties, a solution acceptable to the gas companies. Adelabu explained the need for policy coordination and justified a recent tariff hike affecting only 15% of Nigerians. Proper billing is crucial for the power reform agenda. With 700MW from the Zungeru hydroelectric power plant, Nigeria’s total power generation has reached 5,000MW.
Former Minister of Power Barth Nnaji and Labour Party candidate Peter Obi urged an emergency declaration in the power sector to address ongoing issues. The African Development Bank (AfDB) plans to approve a $1bn operation to support Nigeria’s power reforms. This includes investments in transmission, mini-grids, and battery storage systems.
These measures are part of efforts to improve Nigeria’s power sector, ensuring reliable electricity and supporting economic growth.