By Adedapo Adesanya
The Minister of Power, Mr Adebayo Adelabu, has disclosed that President Bola Tinubu has approved the gradual payment of power sector debts estimated at over N3.3 trillion as part of the measures to tackle power outages in the country head-on.
Following the approval, the N1.3 trillion the federal government owes the power-generating companies will be paid via cash injections and promissory notes while about $1.3 billion (N2 trillion using the current official closing rate) owed to gas companies will be paid via cash and future royalties.
Mr Adelabu said the FG has commenced the payment of the cash part of the N1.3 trillion debt owed to generation companies (Gencos) and concluded plans to settle the second part via promissory notes within a timeframe ranging from two to five years.
Speaking at the 8th Africa Energy Marketplace held on Thursday in Abuja, Mr Adelabu noted that the debt was as a result of the government subsidising electricity by shouldering the gas payment component for power generation.
However, over the years this payment has not been steady, leading to the huge gas debts as well as indebtedness to power generation companies.
Disclosing the solution to the issue, Mr Adelabu stated that President Tinubu had directed the Minister of Finance to make immediate payment of N130 billion from the Gas Stabilisation Fund, (10 per cent of the N1.3 trillion) owed Gencos, adding that the rest will be spread over some time.
The power minister further explained that the payment of $1.3 billion legacy debts owed gas producers would be sourced from future royalties and income streams in the gas sub-sector, a solution deemed satisfactory by the gas-supplying companies.
“It is true that I mentioned that Mr President has approved the submission of the Hon. Minister of State Petroleum (Gas) to defray the outstanding debts owed to the gas supplying companies to the power sector operators.
“The payments will be in parts. We have the legacy debt and we have the current debt. For the current debt, approval has been given for a cash payment of about N130bn from the Gas Stabilisation Fund, which the Federal Ministry of Finance will pay, if not already paid.
“The payment for the legacy debts is going to be made from future royalties and streams of income in the gas sub-sector which is quite satisfactory to the gas supply companies.
“The last amount that was being quoted was $1.3 billion, which we believe will go a long way to encourage these gas companies to enter into firm supplying contracts with the power generating companies,” he explained.