Mr Adebayo Adelabu Minister Of Power Announces Federal Government to Disburse N130 Billion to Settle Gas Supply Debt

Minister Of Power, Mr Adebayo Adelabu reiterate that the Federal Government of Nigeria has announced plans to address the significant gas supply debt in the Nigerian Electricity Supply Industry (NESI). The Minister of Power, Mr. Adebayo Adelabu, disclosed this at the . held in Abuja. He revealed that President Bola Tinubu has authorized the Ministry of State for Petroleum Resources (Gas) to initiate the repayment process. The outstanding debt has been categorized into two parts: legacy debt and current debt.

For the current debt, the government has approved a cash payment of N130 billion, which will be sourced from the gas stabilization fund managed by the Federal Ministry of Finance. The legacy debt, amounting to approximately $1.3 billion, will be settled through future royalties and income exchanges within the gas sub-sector. This structured approach aims to reassure gas supply companies and promote the establishment of firm supply contracts with power generating companies.

Implications for Power Generation and Gas Supply Contracts

Minister Adebayo Adelabu emphasized the importance of firm contracts between gas suppliers and power generation companies to ensure a consistent and reliable power supply. Minister Adebayo Adelabu noted that without such contracts, gas suppliers face no penalties for non-delivery, leading to irregular power generation. The government’s strategy includes enforcing contractual obligations, which will bind gas suppliers to consistently meet the needs of power generating companies, thus stabilizing the electricity supply chain.

To address the power sector’s debt, currently estimated at N1.3 trillion, the government plans a mixed payment approach. A portion of the debt will be paid in cash, while the remainder will be settled through a guaranteed debt instrument, likely a promissory note. This plan follows the successful reconciliation of debts between the government and power generating companies, ensuring that payments are legally binding and beneficial for all parties involved.

Challenges in the Power Sector and Financial Viability of DisCos

The Chairman of the Nigerian Electricity Regulatory Commission (NERC), Mr. Sanusi Garba, highlighted the financial struggles faced by Electricity Distribution Companies (DisCos). He pointed out that these companies are technically insolvent, making it challenging for them to raise the necessary capital for investment. This financial instability stems from historical mismanagement and inaction at both policy and operational levels.

Garba stressed the need for strong political will to implement power sector reforms that would address these deep-rooted issues. He noted that the current state of the DisCos hampers their ability to attract debt or equity financing, which is essential for their operational and infrastructural development. The government’s commitment to resolving the gas supply debt and ensuring reliable contracts is a critical step towards stabilizing the sector and encouraging investment.

The Federal Government’s plan to pay N130 billion as part of the gas supply debt is a significant move to stabilize Nigeria’s power sector. By addressing both legacy and current debts, enforcing firm gas supply contracts, and acknowledging the financial challenges of DisCos, the government aims to create a more reliable and sustainable energy future for Nigeria.

Minister Adebayo Adelabu Strategic plan :Potential Impact on Nigeria’s Development

The anticipated improvements in the power sector are expected to trigger an unprecedented revolution, with far-reaching implications for Nigeria’s overall development. Reliable electricity is a fundamental prerequisite for industrial growth, and its availability could catalyze significant advancements in various sectors, including manufacturing, healthcare, and education. This, in turn, would foster economic growth, create jobs, and improve the quality of life for Nigerians.

Furthermore, the ripple effects of stable power supply would extend to attracting foreign investment, as investors often prioritize regions with reliable infrastructure. The success of Minister Adebayo Adelabu’s strategic plans could position Nigeria as a more attractive destination for international businesses, driving further economic development. If the Ministry of Power can deliver on these promises, it could mark a transformative period in Nigeria’s history, potentially setting a benchmark for other sectors to emulate.