Minister of Power, Adebayo Adelabu has stated that Nigeria can no longer sustain the subsidy on electricity and emphasised the necessity of transitioning towards a cost-effective tariff model.
In a press conference held in Abuja on Wednesday, Adelabu revealed that the country is grappling with a substantial debt of 1.3 trillion naira owed to generating companies (GenCos) and 1.3 billion dollars owed to gas companies.
Despite a budgeted subsidy of 450 billion naira for this year, the minister disclosed that the ministry requires over 2 trillion naira for subsidy.
In response to the financial constraints, Adelabu announced that state governments will be permitted to independently generate power to supply their respective states.
Addressing the persistent challenges in the power sector, Adelabu highlighted that the grid has collapsed six times between December 2023 and the present.
He attributed these disruptions to factors such as a shortage of gas, aging machinery in the grid value chain, low capacity to evacuate generated power, and the destruction of power stations in the North-East geopolitical zone.
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Furthermore, the Minister shared concerns about the Transmission Company of Nigeria, which has over 100 abandoned projects. He attributed this situation to variations in contract figures due to forex fluctuations.
Consequently, the company will refrain from awarding new contracts until all pending projects are completed.