The Minister of Power, Adebayo Adelabu, has said the Federal Government plans to pay N2 trillion out of the N4 trillion it is owing to electricity generation companies (Gencos) before the end of 2025. The minister made this statement in Abuja on Thursday during the sixth edition of the 2025 Ministerial Press Briefing Series.
Adelabu explained that the payment would be made using a mix of cash and promissory notes. According to him, this move is meant to stop the Gencos from shutting down their plants over the huge debts the government owes them. He said talks have already started with the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on how to make these payments.
The power minister said the promissory notes will be strong enough to be used by the companies at banks to get cash quickly if needed. These promissory notes, he said, are like government guarantees that can be used to raise money while waiting for actual payments.
Recently, Gencos, under the Association of Power Generation Companies, had warned that they might shut down due to the heavy debt burden, which has now crossed N4 trillion. They said they have not been paid fully for the electricity they produced and sent to the national grid. The companies described the situation as a serious liquidity crisis in the sector.
Adelabu explained that the debt mostly comes from unpaid subsidies. He said half of the N4 trillion is a “legacy debt” that was already there before this administration, while the remaining part piled up in 2024. He admitted that the threat by Gencos to shut down their plants is real, but the government is already working on how to sort things out gradually.
He said, “We can’t pay the entire debt at once, but we will start paying it gradually. Some will be paid through cash using the budget, while some will be paid with promissory notes.” He added that “by the end of the year, we should be able to pay close to N2 trillion.”
Adelabu also talked about why the electricity subsidy is a problem. He said the real cost of generating one kilowatt-hour of electricity is about N170, but most Nigerians still pay only N60. According to him, only 15 percent of electricity consumers—those in Band A—pay the full cost, which is about N209 per kilowatt-hour.
He said, “We are not removing subsidies totally, but we want to target it better. Before now, the subsidy helped rich people more. Now, we want to focus it on poor people who really need it.”
The minister also noted that even though the government has increased electricity tariffs for Band A customers, the goal is to make the sector financially stable. He said the 11 electricity distribution companies (DisCos) are not yet collecting cost-reflective tariffs from most customers, which discourages investment.
According to Adelabu, “We must face the reality. Energy is not cheap anywhere in the world. But we are making sure that only those who can afford to pay more, do so.”
He warned that any DisCo collecting Band A tariffs without providing the promised 20 hours of electricity daily will be penalised. This, he said, is part of the new reforms to ensure better service delivery.
Despite public anger over the recent increase in electricity tariffs, Adelabu said the government is not on the side of the companies but is only trying to make the system work. “We are on the side of Nigerians,” he said.
He also shared that since the new tariff for Band A customers started, the electricity market has made an additional N700 billion in revenue. He said market revenue rose from N1 trillion in 2023 to N1.7 trillion in 2024. According to him, this 70 percent increase shows that the reforms are working.
“We now have a situation where service delivery and financial stability are happening together,” the minister said.
