By issuing bonds and promissory notes, the Federal Government of Nigeria intends to pay off around N1.7 trillion in outstanding electrical debt.
This strategy is included in the Accelerated Stabilization and Advancement Plan (ASAP) document that was given to President Bola Tinubu by Wale Edun, the Coordinating Minister of the Economy and Minister of Finance.
The goal of this strategy is to handle Nigeria’s power sector’s financial issue and a large tariff gap. It is anticipated to be implemented during the next six months.
The Federal Inland Revenue Services (FIRS), the Central Bank of Nigeria (CBN), and the Minister of Finance will collaborate with important players in the power industry to adopt alternative methods of settling verified legacy debt, mainly through the issuing of bonds and promissory notes, as per the ASAP document obtained by Nairametrics.
Other major plans for the power sector
The money that gas suppliers receive quarterly is another important intervention. The purpose of this phase is to provide a stable and dependable gas supply to power plants, which is essential for sustaining steady electricity generation. This intervention is expected to cost N216 billion. The replenishment of the Gas Supply Stabilization Fund (GSSF), which is crucial for preserving the stability and dependability of the gas supply chain, is the effect of this provision.
The inclusion of renewable energy sources in Nigeria’s energy mix is another plan. Studies on the variable renewable energy integration (VREI) of renewable energy sources, like wind and solar power, will be carried out in order to integrate them into the national grid. With a $2 million investment, this intervention seeks to lower total energy costs and enhance the energy mix, resulting in a more economical and sustainable power industry.
The replenishment of the Gas Supply Stabilization Fund (GSSF), which is crucial for preserving the stability and dependability of the gas supply chain, is the effect of this provision.
The inclusion of renewable energy sources in Nigeria’s energy mix is another plan. Studies on the variable renewable energy integration (VREI) of renewable energy sources, like wind and solar power, will be carried out in order to integrate them into the national grid. With a $2 million investment, this intervention seeks to lower total energy costs and enhance the energy mix, resulting in a more economical and sustainable power industry.
Increasing the Niger Delta Power Holding Company’s capacity is another important initiative (NDPHC). The €4.5 million project is anticipated to add 1000 MW of generation capacity, greatly increasing Nigeria’s overall power supply and resolving the nation’s ongoing power problems.
Total expenses and anticipated results
These urgent actions are expected to cost a total of $245.6 million, €4.5 million, and N1.916 trillion.
The government intends to swiftly stabilize the power industry and guarantee a more dependable supply of electricity throughout Nigeria with these measures.
The electricity industry is anticipated to be greatly impacted by the effective execution of these reforms, which will address both the infrastructure and financial issues.
Things To Note
Tony Elumelu, Chairman of the Board of Directors at Transcorp Group, has criticized the significant debts due to electricity production firms (GenCos) by the Nigerian Bulk Electricity Trading Plc (NBET) in response to the financial difficulties facing the industry. He emphasized the need for liquidity to support consistent energy generation and encouraged the federal government to move quickly to address these issues.
To guarantee their continuous functioning, the GenCos also urged the federal government to pay off outstanding electrical arrears.
They issued a warning that the sustainability of Nigerians’ access to energy generation could be compromised by the nonpayment of more than N2 trillion.
Before this, the Federal Government declared its intention to pay N130 billion to satisfy a portion of the Nigerian Electricity delivery Industry’s (NESI) debt related to gas delivery. The Minister of Power, Mr. Adebayo Adelabu, stated that President Bola Tinubu approved a plan about gas from the Minister of State for Petroleum Resources, which calls for paying off the gas suppliers that the power industry still owes money to.
