The Minister of Power, Adebayo Adelabu, has revealed that the Federal Government would begin making payments for the debts owed to power generating companies and gas suppliers from April.
While on a working visit to Egbin Power Plc in Ikorodu area of Lagos State on Thursday, Adelabu made this announcement.
He also mentioned that he would work with the Central Bank of Nigeria to prioritize foreign exchange allocation to the power sector in order to increase the capacity for generating output.
Discussing the debt owed to stakeholders in the power sector, Adelabu stated that he was at Egbin to seek the GenCo’s understanding.
“The Federal Government owes the power generating companies a lot of money, with Egbin Power plant being the top creditor. We don’t want this to disrupt their operations. They’ve been generous enough to keep generating, otherwise they could have shut down. We don’t want this to happen to this power asset.
“The Federal Government is now focusing on reducing the outstanding debts, and I have assured the board and management that starting from April, we will begin paying off the debts as a form of incentive to keep them operational,” he said.
Regarding the ongoing gas shortage, he said, “Gas shortage has been a hindrance to all our gas-fired power plants. We have already had discussions with the Minister of State Petroleum Resources (Gas) and we are also meeting with the gas suppliers to appeal to them that the Federal Government is ready to start paying off the debts that we owe them.
“We are planning to make some cash payments and issue promissory notes. We are also considering granting them access to Nigeria’s gas wells in order to gradually settle the debts of the gas suppliers.
“This will soon be a thing of the past. We will start to see the effects of this from April. I have had meetings with the Minister of Finance and Minister of Budget and Economic Planning, and they have promised to provide funds to start paying off these debts”.
The Chief Executive Officer of Egbin Power, Mokhtar Bounour, spoke about the significant revenue loss due to the current gas shortage, which poses a threat to power generation nationwide.
The CEO pointed out that the power generating company has been unable to operate the plant at full capacity due to insufficient gas supply.
He stated that the plant, which has the capacity to generate 1000MW, currently produces around 400MW due to the lack of available gas.
Regarding the private meeting with the minister, Bounour mentioned that the management had outlined all the challenges being faced and said, “They assured us that they will gradually solve them so that we can expect improvements in the near future”.
He explained, “One of the major challenges we are currently facing is the availability of gas. We don’t have enough gas to run the plant at full capacity, and we are losing a considerable amount of revenue. This is a 40-year-old plant, and it requires a lot of effort and investment to keep it running and safe. If you don’t generate, you will have a significant imbalance.
He said that the amount of gas given to them is not sufficient to operate all six units because the gas suppliers are facing technical challenges. They are hoping to receive a larger quantity of gas soon.
He also mentioned that the Federal Government owes the GenCo about N1.4tn.
He explained that aside from the debts owed by the Federal Government, they are facing liquidity issues. However, the Minister has assured them that improvements will start from April, and they are optimistic about it. They believe that without the debts being paid, the business cannot continue.
The PUNCH reported that in February, Adelabu stated that the Federal Government owes the gas companies up to $1.3bn.
