Adebayo Adelabu, the minister of power, at the ongoing Africa Energy Market Place (AEMP) conference in Abuja on Thursday announced the readiness of the Federal government to pay off of N130 billion to gas suppliers from over N2 trillion debt owed to them.
According to Adelabu, President Tinubu approved the submission of the minister of state for Petroleum (Gas) to defray the outstanding debt owed to the gas supply companies to power sector operators.
Adelabu, in February 2024 had explained that the country was owing a total of N1.3 trillion to the power generating companies, out of which 60 per cent is owed to gas suppliers and N2 trillion legacy debt owed to gas companies.
In his exact words about payments, he said…
“The payments are actually in two parts, but we have the legacy debt and we have the current debt. For the current debt, approval has been given for cash payments of about N130 billion from the gas and stabilisation fund, which the federal ministry of finance will pay or even already paid, not very sure.
“The payment for the legacy debt is actually going to be made from future royalties and streams of incomes in the gas subsector, which is quite satisfactory to the gas supply companies, which we believe will go a long way to encourage these gas companies into entering into firm supply contracts with the power generating companies,” he said.
The minister also revealed plans to adopt a new contract model with the gas suppliers, which will keep them under a contractual obligation to supply gas to power generating companies at all time, to ensure consistent power generation.
“So that is the situation and the model that we actually want to adopt for the gas segment of the power sector value chain for the gas. For the power generating companies, the debt is put at N1.3 trillion. I can also tell you that we have the consent of Mr president to pay on the condition of settling the reconciliation of the debts between the government and the power generating companies.
“And this we have successfully done. And it’s been signed up by both parties. Now, the majority have signed up and we are actually engaging others to ensure we have a hundred percent sign off from the power generating companies.
“And the modality of paying this would be in two ways, of course there will be cash injection, immediate cash injection. Government is not buoyant enough to pay down N1.3 trillion once and for all in terms of cash, but a fraction of it that will be paid, while the remaining fraction will actually be settled through a guaranteed debt instrument, preferably, a promissory note, that is more like a comfort to these companies that in next 2 to 5 years government is ready to defray these debt finally.
