President Bola Ahmed Tinubu has approved a plan to pay the power sector debts estimated at N3.3 trillion.
The Minister of Power, Adebayo Adelabu, disclosed this on Thursday at the 8th Africa Energy Marketplace in Abuja.
He noted that the government will liquidate the N1.3 trillion owed to power generation companies and the $1.3 billion debt to gas companies.
Adelabu said the N1.3 trillion debt to power-generating companies would be paid via cash injections and promissory notes, while about $1.3 billion owed to gas companies will be paid via cash and future royalties.
The minister said the federal government had commenced payment of the cash part of the N1.3 trillion debt owed Gencos and concluded plans to settle the second part via promissory notes within two to five years.
He said: “Mr. President has approved the submission made by the Minister of State Petroleum (Gas) to defray outstanding debts owed to gas supply companies by power generation companies.
‘’The payments are in two parts, the legacy debts and the current debts. For the current debt, approval has been given to pay about N130 billion from the gas stabilization fund which the Federal Ministry of Finance will pay.
“The payment of the legacy debt will be made from future royalties in exchange for incomes in the gas sub-sector which is quite satisfactory to the gas suppliers. This will allow the companies to enter into firm contracts with power generation companies.
“For the power generation companies, the debt is about N1.3 trillion and I can also tell you that we have the consent of the President to pay, on condition that the actual figures are reconciled between the government and the companies.
“This we have successfully done and it is being signed off by both parties now. The majority has signed off and we are engaging to ensure that we have 100 per cent sign-off.
“The debt will be paid in two ways, immediate cash injection and through a guaranteed debt instrument, preferably a promissory note. This assures the companies that in the next three to five years, the government is ready to defray these debts.”
