FG to Implement Cost-Reflective Tariff in Power Sector — Adelabu
The Federal Government is set to implement a cost-reflective tariff regime in the electricity sector as part of ongoing efforts to resolve the lingering liquidity crisis in the industry.
Minister of Power, Chief Adebayo Adelabu, disclosed this on Tuesday during the Mission 300 Stakeholders Engagement meeting held in Abuja.
Speaking on the state of the power sector, Adelabu revealed that the government is considering various options to settle the N4 trillion debt owed to power generation companies (GenCos), which has accrued due to the persistent underfunding of electricity subsidies.
“Currently, there’s a huge outstanding debt to the Power Generation companies in the form of unpaid government subsidies which stands at about N4 trillion as of December 2024,” he said.
“The Federal Government is already working out modalities to defray this obligation and to ensure that further obligations are not accrued going forward. The government is working on a plan to transition the sector to a fully cost-reflective regime while implementing targeted subsidies for the economically vulnerable citizens in the country.”
The minister said the era of blanket electricity subsidies would soon end, with the government focusing on targeted support for low-income consumers.
He listed key government priorities in the power sector reform to include “addressing the market liquidity issues and initiating required sector reforms.”
Adelabu also emphasized the need to improve electricity generation capacity by reviving idle plants and diversifying the country’s energy mix.
“Improving our power generation through recovery of idle capacities and expanding energy mix to ensure energy security, and to dilute the power pool with cheaper and cleaner energy sources,” he said.
He added that expanding transmission infrastructure and stabilizing the national grid are high on the government’s agenda.
“Expanding transmission infrastructure to deliver more power, ensuring stability of the national grid to put an end to several grid disturbances and collapses previously observed on the grid, and to further strengthen the coordination and management of the national grid,” Adelabu stated.
To boost the performance of electricity distribution companies (DisCos), the minister cited programs such as the Presidential Metering Initiative and the World Bank-supported Distribution Sector Recovery Program (DISREP).
He reiterated the government’s resolve to reposition the power sector on a path of financial sustainability and investor confidence.
“The government is committed to setting the power sector on the path of sustainability and bankability, by prioritising the different reforms being undertaken in the sector,” he said.
On Mission 300—an initiative aimed at providing electricity to 300 million unserved people across Africa—Adelabu revealed that the total investment needed is $32.8 billion, with $15.5 billion expected from private sector stakeholders.
