The Senate Committee on Power has raised concerns about the ongoing liquidity challenges in Nigeria’s power sector, revealing that the government owes generating and distribution companies approximately N200 billion every month due to tariff shortfalls.

Senator Enyinnaya Abaribe, chairman of the committee, made the disclosure during a press interaction at a retreat held in Ikot-Ekpene, Akwa Ibom State, on Saturday.

The event was organised jointly with the Nigeria Electricity and Regulatory Commission to discuss critical issues affecting the power sector.

Abaribe noted that no payments have been made to distribution companies so far in 2025, adding to existing debts.

He said the country’s total indebtedness now stands at over N4 trillion, combining previous arrears exceeding N3 trillion and the current N800 billion owed this year.

“There’s a liquidity crisis in the power sector. The generating companies are owed so much, the distribution companies are also owed so much,” Abaribe said.

“The tariff shortfalls that we have mean that every month the government owes N200 billion in payments, and for this year, 2025, no payment has been made. In other words, we’re already short by N800 billion. Prior to this time, we had about N3 something trillion debt to the generating companies.”

He further explained the cascading effects of the debt, stating, “The generating companies owe the gas suppliers. The gas suppliers cannot just continue to supply gas indefinitely.”

The senator stressed the need for coordinated action between the federal and state governments to resolve the crisis, saying, “Right now, we have two-tier electricity markets. The state can do it, the Federal Government can do it, so they must all come together and make that decision. How do we get out of this? How do we pay for it? Who pays? Everywhere else in the world, that decision is always taken. Do we take the decision to subsidize fuel that we all used to run around, or do we see the decision to subsidize electricity that goes to every one of us in terms of production. So that’s our choice to make.”

Minister of Power Adebayo Adelabu, who gave an overview of power sector reforms during the retreat, highlighted some improvements under the President Bola Tinubu administration, particularly in power generation capacity.

He also identified funding challenges and the vandalism of energy infrastructure as significant hurdles, noting, “Only in this country are energy equipment being vandalized in such magnitude.”

Representing Governor Umo Eno of Akwa Ibom State, Senator Akon Eyakenyi stressed the importance of steady electricity supply for economic growth.

She described Small and Medium Enterprises (SMEs) as vital drivers of the economy that depend on consistent power availability to thrive.