LAGOS — The Federal Government acknowledged yesterday that most of Nigeria’s electricity Distribution Companies (DisCos) are technically insolvent. They are unable to pay for invoices issued by the electricity market and invest in network expansion projects.
Speaking at the 8th Africa Energy Market Place 2024 in Abuja, Chairman of the Nigerian Electricity Regulatory Commission, NERC, Engr. Sanusi Garba, said the poor financial state of the DisCos makes it difficult for them to raise the needed capital to invest.
Garba highlighted that the challenges facing the sector result from past inactions and missteps by those responsible for managing it at both policy and operational levels.
He stated, “Today, when you look at distribution companies, they are clearly and technically insolvent. Expecting them to raise capital through debt or equity is a herculean task.
“I also want to mention that implementing the power sector reform requires strong political will to make decisions that impact the wider public.”
Minister of Power, Chief Adebayo Adelabu, added that the government is working to make the distribution companies solvent and effective by unbundling their operations along state boundaries. He argued that the current areas covered by the DisCos are too large for them to deliver effective services to consumers.
Regarding the N1.3 trillion owed to power generation companies and the $1.3 billion debt to gas companies, the minister disclosed that President Bola Tinubu has approved a plan to liquidate the debts.
He said, “Mr. President has approved the submission made by the Minister of State Petroleum (Gas) to defray outstanding debts owed to gas supply companies by power generation companies.
“The payments are in two parts: the legacy debts and the current debts. For the current debt, approval has been given to pay about N130 billion from the gas stabilization fund, which the Federal Ministry of Finance will handle.”
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