This debt, according to the minister, has rendered the Nigerian Electricity Regulatory Commission (NERC) toothless in its role of overseeing the industry, leading to epileptic power supply.
Speaking at the launch of the “Light Up South East Scheme” in Enugu on Monday, Adelabu highlighted the crippling effect of the N4 trillion debt on the power sector.
The debt, accumulated across various segments of the value chain, includes unpaid dues to power generation companies (N1.3 trillion) and gas suppliers (over N3 trillion).
The minister asserted that such a monumental debt burden significantly hinders NERC’s ability to effectively regulate the sector and discourages both domestic and international investors.
Adelabu said unless the Federal Government clears the debt, “continuity and sustainability of this sector” cannot be guaranteed.
“We owe about N1.3 trn to the power generation companies and about 1.3 billion dollars to the gas supply companies pre-2014 (and based on) today’s exchange rate, it is more than N3 trillion”
This debt, according to Adelabu, has discouraged investors locally and internationally from the power sector.
Adelabu noted that over 50% of industries, frustrated by the unstable electricity supply, have resorted to generating their own power.
“They (the industries) now have the power in their factories where they generate their own power and you can imagine the number of industries that we have but with separate power-generating plants,” Adelabu lamented, adding that banks are increasingly wary of lending to the sector with no clear path to recouping their investments.
“What bank will be bold enough to put its money in this sector where there is no line of sight on how this money will be paid back?
“This is something that we need to address moving forward as a lot of the lenders have distanced themselves from this sector, which is a major issue”.
To address these challenges and ensure the success of the “Light Up South East Scheme,” Adelabu outlined plans to upgrade transmission and distribution infrastructure to cut technical losses and deploy smart metering and improved bill collection to minimize commercial losses that currently average 52 per cent.