Nigerians should prepare for cost-reflective electricity tariffs as the government can no longer sustain massive power subsidies, Minister of Power Adebayo Adelabu has said.
Speaking during a meeting with the Chairmen of the Generating Companies (GenCos) in Abuja, Adelabu warned that the current system is economically unsustainable. “We have to understand that our economy cannot sustain subsidies indefinitely,” he said.
“Citizens must pay the appropriate price for the energy consumed.”Although he promised continued support for the poor, Adelabu did not specify which Nigerians would qualify as “economically disadvantaged.”
Currently, only 15 per cent of electricity consumers, classified as Band A, are excluded from subsidies. According to the Nigerian Electricity Regulatory Commission (NERC), the actual average tariff in February stood at N116.18/kWh, but consumers paid only N88.21/kWh — leaving a subsidy gap of N27.97 per kilowatt hour.
The minister revealed that the Federal Government owes GenCos over N4 trillion in unpaid subsidies. He assured the power firms that the administration plans to offset a large chunk of this debt using cash and financial instruments like promissory notes.
“There is a need to pay a substantial amount of the debt in cash,” Adelabu said.“Let us pay a substantial amount, then ask for a debt instrument in promissory notes to pay the rest.”Chairman of Mainstream Energy Solutions, Col. Sani Bello (rtd.), who led the GenCos delegation, described the debt as a critical threat.
“Without urgent intervention, the entire power ecosystem could collapse,” Bello warned.Other industry leaders echoed the concerns. Kola Adesina, chairman of Egbin Power, called the situation a “national emergency.”
Dr. Joy Ogaji, CEO of the Association of Power Generating Companies, pointed to erratic gas supply, forex instability, and crippling payment defaults as major threats to GenCos’ survival.
“GenCos have borne unsustainable risks—from grid failures to unproductive taxes—while remaining patriotic,” she said.“The plunge of the naira from N157/$1 in 2013 to N1,600/$1 has made maintenance and loan repayment nearly impossible.”
The government has scheduled a meeting between President Bola Tinubu and the GenCos to address the debt and ensure power sector stability.
