The Federal Government is committed to implementing a cost-reflective tariff in the electricity sector as a key step toward resolving the liquidity crisis in the industry. This was revealed by the Minister of Power, Chief Adebayo Adelabu, on Tuesday at the Mission 300 Stakeholders Engagement meeting in Abuja.
Adelabu said the government is exploring different options to settle the N4 trillion debt owed to power generation companies.
He said the debt had accumulated due to the government’s continued inability to fully fund electricity subsidies.
Adelabu stated that the government plans to phase out blanket subsidies in the sector and replace them with targeted support for vulnerable and low-income consumers.
According to a statement from the Minister’s office, the priorities of the government in power sector reforms include, “addressing the market liquidity issues and initiating required sector reforms.”
“Currently, there’s a huge outstanding debt to the Power Generation companies in the form of unpaid government subsidies which stands at about N4 trillion as of December 2024. The Federal Government is already working out modalities to defray this obligation and to ensure that further obligations are not accrued going forward, the government is working on a plan to transition the sector to a fully cost-reflective regime while implementing targeted subsidies for the economically vulnerable citizens in the country.
“Improving our power generation through recovery of idle capacities and expanding energy mix to ensure energy security, and to dilute the power pool with cheaper and cleaner energy sources.”
Other areas he highlighted included “Expanding transmission infrastructure to deliver more power, ensuring stability of the national grid to put an end to several grid disturbances and collapses previously observed on the grid, and to further strengthen the coordination and management of the national grid.
“Ensuring viability and performance improvement of the distribution segment of the power sector through strategic programs like the Presidential Metering Initiative and the World Bank-funded Distribution Sector Recovery Program (DISREP).”
He reaffirmed the commitment of the government to setting the power sector on the path of sustainability and bankability, by prioritising the different reforms being undertaken in the sector.
On the Mission 300 which aims to provide electricity to 300 million unserved people in Africa, Chief Adelabu said that estimated investment required for the Mission 300 Compact is $32.8 billion, with $15.5 billion expected from the private sector.
