Two days after the International Monetary Fund, IMF, suggested the stoppage of electricity subsidies in Nigeria, the federal government is already considering discontinuing the subsidy.
The Minister of Power, Adebayo Adelabu, said at a press briefing on Wednesday that it has become “very difficult to sustain subsidy on electricity” because of the subsidy debt hanging on the neck of the Nigerian government.
The government’s debt to electricity-generating companies is running in trillions. It currently stands at N1.3 trillion, according to Adelabu, while the debt to gas companies was $1.3 billion.
The Minister revealed that only N450 billion was budgeted for power subsidy in the national budget for 2024.
In his words, “Today, we are owing a total of N1.3 trillion to the power generating companies, out of which 60 per cent is being owed to gas suppliers. Today we have a legacy debt, before 2014, to the gas companies of $1.3 billion; at today’s rate, that is close to N2 trillion.”
“Now, if you add N2 trillion legacy debt owed gas companies and the N1.3 trillion being owed the Gencos, we have an inherited debt of over N3 trillion in this sector. How will the sector move forward? Nigerians deserve the right to know this.”
Adelabu continued, “N450 billion is less than 20 per cent of the almost N3 trillion that is required for subsidy if we must continue at the current price (for electricity). So these are things that we need to decide on as a nation.”
“What we have made provision for in the 2024 budget for subsidy is N450 billion and we will require N2.9 trillion for subsidy this year. So can we afford it? We must be realistic. Can we afford it?”
Despite the quagmire, Minister Adebayo quickly added, “However, we are working underground to make sure that we resolve these issues and pay these debts either through cash injections or through guaranteed debt instruments to ensure the continuity in the generation of power.”
Adebayo’s new position on the electricity subsidy is shocking to many Nigerians.
Just last November, he had insisted on the subsidy because removing it amounts to causing an “additional burden on Nigerians.”
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