The Federal Government of Nigeria has earmarked N40 billion in the 2024 budget to settle the electricity bill debts of ministries, departments, and agencies (MDAs).
This information was disclosed in the sectoral allocation details released by Solomon Adeola, the Chairman of the Senate Committee on Appropriations.
The allocated amount remains unchanged from the budget for the previous year (2023) but represents an increase from the N27 billion budgeted in 2022. The funds are designated for the ‘Settlement of MDAs’ electricity debts.’
The power distribution companies in Nigeria have repeatedly raised concerns about outstanding debts from end users, particularly MDAs, hindering the smooth operation of the power sector. Despite ongoing discussions and warnings from regulatory bodies like the Nigerian Electricity Regulatory Commission (NERC), the debt accumulation has persisted.
In January 2022, the Executive Director of the Association of Nigerian Electricity Distributors revealed that Federal Government MDAs, including the military, owed over N90 billion in electricity bills. The debt had been accumulating since the privatization of the power sector in November 2013.
Despite the provision of electricity subsidies by the Federal Government, MDAs’ unpaid bills have become a recurring issue. The World Bank, in its Nigeria Public Finance Review report, highlighted the failure of many MDAs to settle their electricity bills as a contributing factor to the government’s continued payment of electricity subsidies.
The allocation of N40 billion in the 2024 budget signals the government’s commitment to addressing the longstanding issue of outstanding electricity debts owed by MDAs.
However, it remains to be seen how this budgetary provision will contribute to resolving the challenges faced by the power sector in the country.
