Electricity Subsidy Crisis: Adelabu Raises Alarm Over ₦4 Trillion Debt, Urges Urgent Reforms in Power Sector
In a recent revelation that underscores the growing crisis in Nigeria’s power sector, the Minister of Power, Chief Adebayo Adelabu, has disclosed that the federal government now spends over ₦200 billion monthly on electricity subsidies, a situation he describes as unsustainable and detrimental to the country’s economic stability.
This major disclosure was made during a two-day retreat organized by the Senate Committee on Power, where Chief Adelabu laid bare the financial strain being borne by the government in its efforts to keep electricity tariffs low for Nigerian consumers.
Over ₦4 Trillion Debt to GenCos: A Growing Burden on Nigeria’s Economy
According to Adelabu, the Nigerian government is currently indebted to electricity generation companies (GenCos) to the tune of ₦4 trillion, out of which a staggering ₦1.94 trillion is owed for 2024 alone. This revelation shines a spotlight on the massive backlog of payments that has accumulated in the power sector.
“The sector also faces a ₦4 trillion subsidy backlog owed to generation companies, including ₦1.94 trillion for 2024 alone. With monthly subsidy shortfalls now hitting ₦200 billion, the Minister warned that maintaining current tariffs is ‘unsustainable,’ straining public funds needed for infrastructure upgrades,” a statement from his media aide, Bolaji Tunji, read.
This situation raises significant concerns about the sustainability of Nigeria's electricity subsidy policy and its implications for future investments in the power sector.
Distribution Companies (DisCos) Under Fire for Poor Performance
Chief Adelabu did not mince words when criticizing the performance of Distribution Companies (DisCos). He identified them as the weakest link in the entire power value chain, lamenting the chronic underinvestment and inefficiencies that continue to plague the distribution segment.
“To salvage the sector, we will soon embark on restructuring underperforming DisCos and tightening enforcement of performance benchmarks,” the Minister stated. “However, without urgent capital injection into distribution networks, gains in generation, including a historic 6,003MW output in March 2025, and transmission upgrades, such as 61 new transformers deployed in 2024, will fail to translate to reliable household supply.”
Adelabu emphasized that despite improvements in generation and transmission, the lack of investment in distribution infrastructure has resulted in Nigerians still not enjoying consistent electricity supply.
Historical Restructuring and Its Failed Promises
Reflecting on the 2003 restructuring of Nigeria’s power sector, Chief Adelabu criticized the initial design and its failed implementation. He noted that DisCos were supposed to partner with foreign technical experts to improve service delivery. However, these partnerships were short-lived, often lasting only a few months.
“In the 2003 restructuring of the sector, the DisCos were supposed to have technical partners, but a lot of them showed partnership with foreign companies for that purpose which lasted for about three months. Immediately they took over, those companies left,” he said. “A lot of them went to the banks to take loans to buy the assets, after taking over, instead of providing infrastructure, they are taking out the money to pay the loans.”
This systemic failure continues to haunt the sector, with many DisCos more focused on profit recovery than infrastructure investment.
Regional Disparities in Electricity Revenue Remittance
The Minister also highlighted the inequities in remittance rates across different regions. DisCos in Northern Nigeria performed poorly, remitting only 30% of their invoices, compared to 67% from their Southern counterparts.
“In the fourth quarter of 2024, DisCos in the North remitted just ₦124.4 billion (30 percent) of their ₦408.86 billion invoice, with Abuja DisCo accounting for 85 percent of Northern payments. Southern DisCos fared slightly better, remitting ₦254.6 billion (67 percent), though 70 percent of this came from Lagos DisCos alone.”
The disparity, according to Adelabu, is primarily due to crumbling infrastructure outside Nigeria’s economic hubs, which has hindered revenue collection and customer satisfaction.
Metering Challenges and New Initiatives
On the pressing issue of electricity metering, which has long been a pain point for Nigerian consumers, the Minister acknowledged that inadequate metering continues to hamper both fair billing and revenue generation. He introduced two key initiatives aimed at bridging the metering gap:
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A ₦700 billion Presidential Metering Initiative.
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A World Bank-supported program targeting the distribution of 4.3 million meters by 2025.
“Closing this gap is fundamental to fair billing and financial sustainability,” Adelabu said. “We are not there yet due to underinvestment and operational inefficiencies.”
With millions of Nigerians still estimated to be on estimated billing, metering reform remains one of the top priorities for the Ministry of Power.
Plans to Attract Private Investment and Regionalize Transmission
Adelabu also outlined strategic plans to attract private investment into Nigeria’s power grid and regionalize the transmission network to reduce the risk of nationwide failures. He referenced the Lagos DisCos as an example of what could be achieved with better infrastructure.
“The 70 percent remittance by the two DisCos in Lagos reflects better infrastructure than what obtains in the northern networks,” he said.
By regionalizing transmission and encouraging investment, the ministry hopes to create a more resilient and efficient national grid.
Boosting Power Supply in Northern Nigeria
To address energy deficiencies in the North, the Minister announced government-led initiatives such as:
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The 1,000MW Makurdi hydropower project.
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The near-complete 215MW Kaduna thermal plant, now at 87% completion.
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Revival of the abandoned 10MW Katsina wind farm, which the Katsina State government has shown interest in taking over with private investors.
“Efforts are on presently to restore this power plant,” Adelabu noted, in reference to the Kaduna thermal station.
“The State government has expressed desire to take this up with some private investors and we have commissioned a feasibility study to concession the farm,” he added, about the Katsina wind project.
These initiatives, if fully implemented, could go a long way in improving power availability in underserved parts of the country.
Vandalism, Power Theft, and the Call for Tougher Laws
One of the most persistent threats to Nigeria’s power infrastructure is vandalism and theft. Chief Adelabu called for stricter laws and tougher penalties to deter these crimes.
“Vandalism should not be treated as a civil offence but a criminal issue,” he said. “Power theft, nonpayment of bills by consumers, and illegal connections are critical factors that need to be tackled.”
He stressed the importance of protecting national assets, especially in light of the massive investments made by the government in transmission upgrades.
Transmission Company of Nigeria (TCN) Faces Financial Crisis
Chief Adelabu raised serious concerns over the financial health of the Transmission Company of Nigeria (TCN), revealing that the agency is struggling to fund operations, maintain infrastructure, or expand its network.
“They are short of funds, they operate solely on their Internally Generated Revenue (IGR), which has been nose-diving over the years. What they get monthly cannot even pay their salary, not to talk of maintaining ageing infrastructure or expanding transmission networks. There should be a way to accommodate TCN in appropriation,” he explained.
Despite these challenges, TCN has shown resilience. In 2024 alone, it installed 61 new transformers, and in the first four months of 2025, another 13 high-capacity transformers were added to the grid.
“The level of stability on our grid today is not by accident but hard work and expenditure,” he said.
Final Thoughts: A Call to Action for a Sustainable Power Sector
Minister Adelabu’s detailed account of the power sector’s woes paints a clear picture: Nigeria’s electricity industry is in urgent need of reform, investment, and accountability. From overwhelming subsidy burdens and poor DisCo performance to vandalism and underfunded infrastructure, the challenges are vast—but not insurmountable.
For Nigeria to achieve a reliable and sustainable power supply, the government must implement bold reforms, attract private investment, and hold all players in the electricity value chain accountable.
As Nigerians look toward a brighter, more electrified future, one thing is clear: the time for action is now.
