Electricity Debt Crisis: Niger, Togo, Others Default on $14.19m Bills

Nigeria’s financial woes have been hit with a further blow as overseas customers defaulted on huge electricity bills of $14.19 million for the first quarter of 2024.
The alarming revelation comes from the Nigerian Electricity Regulatory Commission (NERC) report for the first quarter of 2024, which highlighted the continued non-payment of all four of Nigeria’s international electricity customers.
The customers include neighbouring countries such as Benin Republic, Niger, and Togo, leaving Nigeria’s Market Operators (MOs) with huge unpaid debts. Analysts noted that the alarming situation remains an ongoing issue that needs to be urgently addressed as repeated failures by overseas customers to meet their financial obligations continue to drain Nigeria’s coffers.

The NERC report highlighted a similar pattern within Nigeria. Domestic bilateral clients who were invoiced for a total of N1.86 billion during the same period also defaulted on payments. The report clearly states: “In 2024/Q1, none of the four (4) international bilateral customers serviced by the MO made any payment against the $14.19 million invoice issued to them by the MO for services rendered in 2024/Q1. Similarly, none of the bilateral customers within the country made any payment against the cumulative invoice of N1,860.11 million issued to them by the MO for services rendered in 2024/Q1.”
However, the report notes that some progress has been made in repaying previous debts. Two international clients were able to pay about US$5.19 million, while eight domestic clients were able to settle for about N505.71 million from the previous quarter. While this is progress, repeated defaults on current payment obligations continue to weigh on Nigeria’s already troubled fiscal position.
At the domestic level, a staggering NGN114.12 billion was invoiced to Nigerian distribution companies (DisCos) for upstream services in the first quarter of 2024. This amount includes NGN65.96 billion as generation costs and NGN48.16 billion as transmission and management services.

Despite this hefty invoice, DisCos managed to remit NGN110.62 billion, leaving a deficit of NGN3.5 billion. Nevertheless, the remittance performance of 96.93% marks a notable improvement compared to 69.88% in the previous quarter and reflects stronger efforts to address financial constraints within the sector.

Nevertheless, the issue of outstanding international electricity debt remains large. In 2023, the Federal Government reported having $51.26 million in outstanding debt from overseas customers for electricity exported from Nigeria. To mitigate this, the government issued a directive in May 2024 limiting the supply of electricity to overseas customers to a maximum of 6% of total grid generation per hour.

Furthermore, the Nigerian Electricity Regulatory Commission (NERC) criticized the ongoing practice of favoring overseas customers over local distribution companies (DisCos) during grid imbalances. The Commission said the approach was inefficient and unfair and called for a realignment of priorities.

According to the new regulations, generating companies will be required to allocate not more than 10% of their generation capacity to overseas customers for the next six months.
As Nigeria navigates these turbulent waters, unsettled international and domestic debt threatens to undermine the stability of the country’s power sector and further exacerbate the country’s overall financial problems.