Minister Pledges to Handle GenCos N4tn FG Debt
Minister of Energy has pledged to handle N4tn electrical energy debt owed by GenCos, which noticed the electrical energy distribution corporations threatening a shutdown on Monday.
Weighing in on the event, the particular adviser to the Energy Minister, Bolaji Tunji, stated the federal government is conscious of the event and is making concrete steps to resolve the lingering problem.
He stated as a part of the steps taken by the federal government, the Ministry of Finance will take cost of the cost very quickly.
The media aide responding in a chat on Monday stated, “We’re not unaware of this debt arising from the FG’s dedication on subsidy. A part of the money owed are legacy money owed, which had been on the bottom earlier than the Minister of Energy assumed workplace.
“The Minister of Energy has repeatedly harped on this, understanding the implication of such money owed to the operations of the assorted energy sector stakeholders, particularly the GENCOs. The Minister of Energy could be very a lot involved.
“The difficulty is being mentioned with the Ministry of Finance, making a case for a way the debt have to be paid. We anticipate the Ministry of Finance to take motion on this quickly.”
A nationwide blackout regarded imminent because the 23 energy era corporations warned that they will now not assure a gradual electrical energy provide because of the worsening liquidity disaster within the electrical energy market, with excellent money owed now exceeding N4tn, comprising N2tn for energy provided in 2024 and N1.9tn in legacy money owed.
The companies, beneath the aegis of the Affiliation of Energy Technology Firms, raised the alarm in a press release issued on Monday and signed by the Chairman of the Board of Trustees, Col. Sani Bello (retd.).
They stated the debt burden and operational constraints presently going through the businesses might pressure an imminent shutdown of energy vegetation if pressing interventions weren’t applied.
The businesses famous that vegetation had been being paid lower than 30 per cent of month-to-month invoices for energy provided to the nationwide grid.
They warned that the continued non-payment for electrical energy generated and consumed on the nationwide grid was pushing the Nigerian energy sector in direction of a complete collapse.
The assertion, titled ‘Over N4tn unpaid invoices threaten GenCos imminent shutdown’, lamented the dearth of a transparent financing plan from the Federal Authorities, alongside worsening fiscal and operational constraints inside the Nigerian Electrical energy Provide Trade.
Additionally they accused the Nigerian Bulk Electrical energy Buying and selling Plc and different stakeholders of neglecting GenCos within the utility of the NESI’s “waterfall association”, which sees different service suppliers obtain 100 per cent of their market invoices whereas GenCos get as little as 9 per cent to 11 per cent of what’s due.
The assertion learn, “The Energy Technology Firms (‘GenCos”) are constrained to problem this press launch to attract the eye of the Federal Authorities and key stakeholders to the necessity to urgently tackle the difficulty of insufficient cost for electrical energy generated by them and consumed on the nationwide grid, which is presently threatening the continued operation of their energy era vegetation.
“In opposition to the backdrop of the numerous challenges going through the ability sector in Nigeria, the crises from money liquidity are on the highest burner and have lowered GenCos’ capability to proceed to carry out their obligations, thereby threatening to fully undermine the electrical energy worth chain.
“In mild of the severity of the problems highlighted above, the GenCos are requesting that fast and expedited motion be taken to forestall nationwide safety challenges that will outcome from the failure of the GenCos to maintain regular era of electrical energy for Nigerians.”
Recall that in February, the Minister of Energy, Adebayo Adelabu, disclosed that the federal government owes electrical energy era corporations and electrical energy distribution corporations over ₦4 trillion in electrical energy subsidies.
Giving a breakdown, the minister stated N2 trillion is owed to GenCos as legacy debt, whereas one other N1.9 trillion is owed to them as a part of the electrical energy subsidy for 2024, whereas DisCos are owed N450 billion for the 2024 electrical energy subsidy.
Within the assertion launched beneath the umbrella of the Affiliation of Energy Technology Firms, the GenCos expressed deep frustration over what they described as “insufficient cost for electrical energy generated and consumed on the nationwide grid. They described it as a serious menace to the viability of their energy vegetation.
The group stated regardless of investing considerably in ramping up era capability because the sector’s privatisation in 2013, the absence of agency contracts, poor enforcement of energy buy agreements, and protracted non-payment of invoices have crippled their operations.
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The businesses additionally identified that hopes of being settled by means of exterior help mechanisms just like the World Financial institution’s Energy Sector Restoration Operation have been dashed on account of different market gamers’ failure to fulfill required efficiency targets.
The assertion acknowledged, “GenCos, on their half as accountable traders with patriotic zeal, have made large-scale investments and have continued to reveal absolute dedication by ramping capacities consistent with their contract over these 10 years, amid system constraints, insurance policies & laws that aren’t investor-friendly, growing money owed owed by the FGN with out a clear financing plan, an absence of agency contracts and a market with out securitisation however based mostly on finest endeavours, thereby hampering future planning.
“However this and different extreme difficulties the GenCos have battled with since takeover in 2013, they’ve stored to the phrases of their contractual agreements by ramping up capability, which has been largely constrained systemically.
“In opposition to the backdrop of the numerous challenges going through the ability sector in Nigeria, the crises from money liquidity are on the highest burner and have lowered GenCos’ capability to proceed to carry out their obligations, thereby threatening to undermine the electrical energy worth chain fully.
“The GenCos expectations of being settled by means of exterior help, such because the World Financial institution PSRO, have additionally been dampened on account of different market individuals’ incapability to fulfill their respective distribution-linked indicators, enshrined within the Energy Sector Restoration Program.”
To avert a complete shutdown of energy era throughout the nation, the GenCos issued an inventory of pressing calls for to the Federal Authorities:
The GenCos warned that except pressing and coordinated steps are taken to handle the liquidity crunch, Nigeria’s electrical energy provide might collapse, with dire penalties for nationwide safety, financial development, and public welfare.
The GenCos added,” In mild of the severity of the problems highlighted above, the GenCos are requesting that fast and expedited motion be taken to forestall nationwide safety challenges that will outcome from the failure of the GenCos to maintain regular era of electrical energy for Nigerians.
“The 2024 assortment charge has dropped under 30 per cent, and 2025 isn’t any higher, severely affecting GenCos’ capability to fulfill monetary obligations. Tax and Regulatory Challenges: Excessive company earnings tax, concession charges, royalty fees, and new FRC compliance obligations are additional straining GenCos’ income. GenCos are presently owed about N4 trillion (N2 trillion for 2024 and N1.9 trillion in legacy money owed). No potential options, together with money funds, monetary devices, and debt swaps, are in sight.
“The 2025 authorities funds allocates solely N900 billion, elevating considerations about its adequacy to cowl arrears and future funds. The ability generated by GenCos has continued to be consumed in full with out corresponding full cost, however the graduation of the Partial Activation of Contracts within the NESI, which took impact from July 1, 2022; the minimal remittance order; bilateral market declaration; waterfall association; the dangers of inflation; foreign exchange volatility with no devoted window to cushion the impact of the foreign exchange influence; or the supplementary MYTO order, which leaves about 90 per cent of GenCos month-to-month invoices unmet with out a bankable securitisation or financing plan. This example has dire penalties for the GenCos and, by extension, the complete energy worth chain”.
The businesses that known as for the implementation of cost plans to settle all excellent GenCos invoices noticed that “the circulation of cash inside the energy trade is without doubt one of the elementary issues stopping Nigerians from having fun with continued and sustainable enchancment in electrical energy provide”.
In the meantime, the Managing Director and Chief Government Officer of the Niger Delta Energy Holding Firm of Nigeria, Engr Jennifer Adighije, says President Bola Tinubu is intervening to settle the liquidity disaster within the energy sector.
Adighije acknowledged this not too long ago whereas being honoured because the Younger Achiever of the 12 months on the 2025 Power Instances Awards for her contributions to the ability sector.
Talking with newsmen on the award presentation dinner, the managing director described the award as a humbling expertise, particularly for a brand new administration group that has been within the workplace for lower than a 12 months.
In line with her, the central problem within the energy sector is about liquidity, and as soon as there’s sufficient money circulation, the difficulty will probably be resolved.
Adighije maintained, “The problems principally are round liquidity. As soon as now we have enough money circulation, then we are able to additionally procure extra fuel to make sure that we scale our era capability. So, the problems are round liquidity,” she stated.
The NDPHC boss revealed the president’s plan to help the sector with money backing to safe extra fuel for the thermal vegetation.
“I do know that Mr President has already graciously promised us interventions that may be certain that we are able to have the money backing to safe extra fuel sources. You already know that fuel is our feedstock.
“So, when now we have extra fuel, now we have extra energy era,” she burdened.
