Adelabu: Electricity Subsidy Driving Power Sector into ₦4 Trillion Debt

Nigeria’s Minister of Power, Chief Adebayo Adelabu, has sounded the alarm over the mounting financial crisis in the nation’s power sector, revealing that the Federal Government is indebted to electricity generation companies (GenCos) to the tune of ₦4 trillion. This figure includes a staggering ₦1.94 trillion accrued in just 2024.

Speaking at a two-day Senate Committee on Power retreat, Adelabu described the current electricity subsidy regime as unsustainable, consuming over ₦200 billion every month—funds he says are urgently needed for infrastructure upgrades.

“The sector is choking under a ₦4 trillion subsidy backlog. Continuing this way is simply not feasible,” Adelabu said, in a statement issued by his media aide, Mr. Bolaji Tunji.

Current Tariffs Are Draining National Resources

The Minister emphasized that the existing electricity tariffs are no longer tenable, stating that while subsidy payments shield consumers, they are draining public funds that should be directed at revamping the nation’s dilapidated infrastructure.

Adelabu also criticized the performance of Nigeria’s electricity Distribution Companies (DisCos), warning that without urgent reforms and capital injection into distribution networks, recent gains in generation and transmission would amount to nothing.

“In March 2025, we recorded a historic 6,003MW in generation and deployed 61 new transformers in 2024 alone. But these gains mean little if power doesn’t reach households due to poor distribution.”

DisCos Blamed for Undermining Progress

The Minister did not hold back in his criticism of DisCos, saying their poor performance, aging infrastructure, and electricity theft have made the sector increasingly reliant on unsustainable subsidies. He noted that many DisCos misled stakeholders during the 2003 sector restructuring by showcasing foreign technical partners that later pulled out.

“Instead of investing in infrastructure, many used bank loans to acquire assets and are now focused on repaying those loans, not improving service delivery.”

Despite a 70% boost in market liquidity—raising total revenue from ₦1 trillion in 2023 to ₦1.7 trillion in 2024—the distribution segment remains the weakest link. Adelabu highlighted sharp disparities in remittances:

• In Q4 2024, Northern DisCos remitted just ₦124.4 billion (30%) of their ₦408.86 billion invoice, with Abuja DisCo accounting for 85% of that.

• Southern DisCos did better with ₦254.6 billion (67%) remitted, but 70% of this came from just the Lagos DisCos.

Metering Gap and New Initiatives

The Minister identified the metering gap as a major cause of revenue loss and consumer distrust. In response, the government launched a ₦700 billion Presidential Metering Initiative (PMI) and a World Bank-backed program aimed at deploying 4.3 million meters by 2025. So far, 75,000 meters have been installed (as of April 2024), with an additional 200,000 expected by May.

Adelabu also announced plans to attract private sector investment into grid infrastructure and to regionalize transmission networks to minimize risk of failures. He noted that Lagos-based DisCos’ higher remittance rates reflect better infrastructure compared to other regions.

Legislative Support Needed

In a passionate appeal to the National Assembly, Adelabu called for tougher laws to protect energy assets from vandalism and theft. He advocated for criminalizing such actions to safeguard the stability of Nigeria’s power supply.

“Vandalism, illegal connections, and non-payment of electricity bills should no longer be treated as civil offenses. These are serious issues sabotaging the sector.”

Progress Amidst Challenges

Despite these challenges, the Minister shared some positive news: there has been no national grid collapse since the beginning of 2025—a rare and encouraging development in the sector.