In an effort to address the persistent liquidity crisis in the Nigerian Electricity Supply Industry (NESI), the federal government has commenced the payment of gas supply debts totaling N1.3 trillion. Minister of Power, Adebayo Adelabu, announced the development, noting that an initial N130 billion in cash has been allocated to settle debts owed to power generation companies.
During the 8th Africa Energy Marketplace 2024 in Abuja, Adelabu explained that President Ahmed Bola Tinubu directed the Minister of Finance to initiate the payment. The remaining legacy debts will be addressed through promissory notes or payment guarantees.
Adelabu dismissed claims that the new electricity tariff has increased production costs for manufacturers, contributing to higher prices for goods and services. He clarified that the tariff adjustment aims to alleviate economic hardships, not exacerbate them.
“Those in Band A, if they accurately compare their total energy costs—including grid supply and generator expenses—before and after the tariff review, will find a reduction of 30 to 40 percent,” Adelabu stated. He emphasized that the new tariff should lower energy costs for manufacturers, thus reducing production expenses, except for those who previously evaded electricity payments.
In addition to the federal government’s efforts, the African Development Bank (AfDB) has earmarked $1 billion to support Nigeria’s power sector reforms, stemming from the Electricity Act 2023. AfDB’s Vice President for Power, Energy, Climate Change, and Green Growth Complex, Dr. Kevin Kariuki, outlined that this funding will support policy-based operations and the implementation of the National Integrated Electricity Policy and Strategic Implementation Plan (NIEP-SIP).
The AfDB’s support includes financing the construction of 500 km of transmission lines and four substations with a capacity exceeding 1000 MVA, as well as the development of 150 mini-grids under the $200 million Nigeria Electrification Project. Additionally, the bank will fund a study for the Transmission Company of Nigeria (TCN) to explore the deployment of Battery Energy Storage Systems, aimed at enhancing grid stability and increasing renewable energy generation.
Kariuki highlighted that Nigeria is a key part of the AfDB’s $20 billion Desert to Power Initiative, which aims to generate 10,000 MW of solar power across 11 countries in the Sahel region, providing electricity to 250 million Africans.
The event themed “Towards Nigeria’s Sustainable Energy Future: Policy, Regulation, and Investment – A Policy Dialogue for the National Integrated Electricity Policy and Strategic Implementation Plan (NIEP-SIP),” underscores the commitment to transforming Nigeria’s energy landscape through strategic investments and policy reforms.
