Ministries, Departments, and Agencies (MDAs) of the federal government owe over N100 billion in unpaid bills to electricity distribution companies (DisCos), despite a N15 billion government allocation aimed at addressing legacy debts.
This situation has left electricity DisCos struggling to stay afloat and further cripples the already fragile electricity supply in the country.
BusinessDay’s findings showed the failure of MDAs to settle their electricity debts has exacerbated the financial woes of DisCos, which are already burdened by inefficiencies, outdated infrastructure and rising operational costs.
The N15 billion allocation, which was approved by the federal government to clear outstanding debts owed to DisCos, has failed to achieve its intended purpose, as MDAs continue to default on their obligations.
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A legacy of unpaid bills
The debt crisis in Nigeria’s power sector is not new. For years, MDAs have been notorious for their inability or unwillingness to pay for electricity consumed. The culture of non-payment has created a vicious cycle, where DisCos are unable to recover costs, invest in infrastructure or improve service delivery.
BusinessDay’s findings show the Presidential Villa owes Abuja Electricity Distribution Company (AEDC) N923 million despite having a budget of N360 million for electricity charges in 2023 and N354 million for 2022.
The Ministry of Defense is indebted to AEDC to the tune of N5.43 billion despite having a budget of N121 million for its headquarters’ electricity charges in 2022 and another N121 million in 2023.
The Ministry of Education has a debt of N1.82 billion with AEDC despite having a budget of N6.2 million for electricity charges in its headquarters’ operations in 2023.
Also, the Ministry of Health owes AEDC a debt totalling N1.19 billion despite having a budget of N14.75 million for its headquarters’ electricity charges in 2023.
“Most of these debts by MDAs were accumulated over the years, although some of them are unverified debts,” said Aisha Mohammed, an energy analyst at the Lagos-based Center for Development Studies.
“Nigeria’s rising budget deficit is also having a multiplier effect on some MDAs. Some of them struggle to implement 60 percent of the budget due to lack of funds,” she added.
Other critics and analysts have raised questions about the government’s accountability and fiscal responsibility in light of these revelations.
They stressed the importance of transparency and adherence to contractual agreements to prevent such instances in the future.
Mayowa Balogun, an economist, expressed scepticism on social media platform X, saying: “Who is deceiving who? The problem is from the government, not only do they lag on subsidies, they don’t pay their subsidised bills either.”
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Ken Uttih, an energy professional, expressed dismay, saying: “Too many problems in this geographical expression. See how much the government is owed, even the so-called Presidential Villa. How can we achieve a constant electricity supply if this is happening?”
Last May, Danladi Baba, regional manager of the Abuja DisCo, said that the Kogi State government owed N483 million for electricity bills as of April 2023.
Military invasion of Ikeja Disco
Last Thursday, the headquarters of Ikeja Electricity Distribution Company was invaded by personnel of the Nigerian Air Force (NAF), following the disconnection of electricity supply to the force’s logistics base.
The officers, who were reportedly enraged by the disconnection, stormed the premises, demanding immediate reconnection despite outstanding bills and allegations of electricity theft.
Eyewitnesses said the situation escalated quickly as the personnel went on a rampage, breaking down doors and searching for Folake Soetan, CEO of Ikeja Electric.
When they found Soetan, the officers allegedly assaulted the CEO and forced her into the trunk of a vehicle within the premises.
In response to allegations of disconnection of power, Kingsley Okotie, head of corporate communications at Ikeja DisCo, clarified the circumstances surrounding the disconnection of power to the Nigerian Air Force base.
He explained that the disconnection was not solely due to non-payment but also because of other operational concerns, including safety issues for IKEDC personnel.
“Technically, they are disconnected, and the reason is not primarily financial but due to other factors,” Okotie stated.
“The level of hostility within the barracks towards our staff is high. We have had unpleasant incidents, including cases of harassment. We cannot work under such conditions,” he added.
BusinessDay’s findings showed the dispute originated from the Ikeja Electricity Distribution Company (IKEDC) disconnecting power supply to the Nigerian Air Force base in Lagos due to outstanding electricity debts.
Sources within the Air Force base disclosed that an agreement had initially been reached for NAF to remit N60 million monthly to IKEDC in exchange for a guaranteed 10 to 12 hours of electricity supply per day. However, IKEDC claims that despite some payments, a substantial outstanding debt still exists.
The power outage reportedly raised concerns about security and operational efficiency within the Air Force base, with officials arguing that the electricity supply is critical to national security operations.
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A similar attack occurred at Ikeja Electric’s business unit on Ago Palace Way, Okota, Isolo, Lagos, where military personnel were seen wielding firearms and assaulting staff members.
A viral video circulating online captured over seven staff members seen kneeling on the ground while others were being physically assaulted. Armed personnel patrolled the premises, further heightening concerns over the use of force against civilian workers.
The impact on DisCos, consumers
The inability of DisCos to recover these debts has far-reaching implications for both the companies and the electricity consumers. DisCos rely on revenue from electricity sales to maintain and upgrade their infrastructures, pay their staff, and meet other operational expenses. When a significant portion of this revenue is tied up in unpaid bills, it creates a cash flow crisis that hampers their ability to function effectively, experts say.
As a result, consumers are left to bear the brunt of the crisis. Frequent power outages, poor service delivery and rising tariffs have become the norm in many parts of the country.
The situation is particularly dire in rural areas, where access to electricity is already limited. The financial strain on DisCos has also made it difficult for them to invest in new technologies and innovations that could improve the efficiency and reliability of the power supply.
To address the crisis, stakeholders have proposed several measures, including the establishment of a dedicated task force to recover debts owed by MDAs, the introduction of prepaid meters for all government agencies, and the implementation of a more transparent and efficient billing system.
