The Federal Government has announced that it has paid off N205bn of the N1.3tn debt owed to power generation companies, in a move aimed at boosting liquidity in the power sector.
The Minster of Power Adebayo Adelabu disclosed this in Abuja on Monday during an oversight visit by the House of Representatives Committee on Power.
Adelabu emphasised the need for lawmakers to hold the executive accountable for settling outstanding debts to players in the sector and must therefore sustain their pressure to achieve this goal.
“In terms of markets and liquidity, the government is also owing these companies, but they have started paying them little by little. Just about three weeks ago, out of the about N1.3tn we are owing the Generation Companies, we were able to pay them N205bn. And they are also happy.
“But I will plead with the members of the House committee to help us mount pressure on the executive to continue to pay these people,” he said.
Adelabu also announced plans by the Federal Government to introduce a franchising system for power distribution.
He explained that the franchising system will allow trusted investors to take over existing power distribution infrastructure, bring in new transformers, reconstruct cables, and supply power to customers. In return, the investors will pay royalties to the government.
He made this announcement as part of the ministry’s effort to ensure electricity gets to every part of the country where the major distribution companies are not considered profitable to operate.
“We want to introduce what we call a franchising system,” Adebayo said.
“We have a lot of trusted investors that are ready to take out some opportunities out of the existing major discourse. Do investment with a structure. Bring new transformers. Reconstruct the cables and start supplying power. All we need to do is to pay a royalty to Abuja Electricity Distribution Company,” he said.
The minister also discussed the challenges facing the power sector, including the high cost of producing electricity and the need to balance activities across different regions.
He emphasised the need for Nigeria to modernise its power sector infrastructure and overhaul the existing tariff policy, stressing that a comprehensive overhaul of all aspects of the power sector is necessary to drive improvement.
