MINISTRIES, departments, and Agencies (MDAs) of the government indebted to distribution companies over electricity charges are dragging down Nigeria’s power sector reforms despite the approval of N5bn electricity in the 2023 financial year, findings have shown.

Findings by The ICIR have shown that the federal government approved a total of N5.01 billion for payment of electricity charges for 11 Ministries, Departments, and Agencies (MDAs) in the 2023 fiscal budget.

These debts by the MDAs have huge impacts on Nigeria’s power sector crisis, prompting the  Federal Government’s borrowing of about $1.5 billion from the World Bank to put the power sector on the right trajectory.

These loan facilities would be paid for eventually, despite the ‘payment delinquency’ by the various debtor MDAs, which is already affecting investments in power sector infrastructure.

“I’m worried about the MDA debt to the tune of over N5 billion, because looking at it from the perspective of the policymakers, I mean the policymakers manning various debtor ministries don’t have respect for their policy. In that respect, how would an investor take you seriously?,” the CEO of Sage Consulting and former corporate spokesperson of AEDC, Oyebode Fadipe told The ICIR.

“If the Ministry of Power, or Ministry of Finance is not paying, they don’t have the moral right to tell the man and the woman living in the suburbs to pay. They are not setting a good example. Payment delinquency is affecting the market in a tough way. The over N5 billion fee is an accumulation of several months. It means they have not been paying for months.

“The payment delinquency of MDAs affects Nigeria’s power sector market. How do you want an investor to take us seriously, when there is payment delinquency from the MDAs that should pay? The DisCos are the revenue collector agents of the market. Whatever the Disco collects is shared among the market value chains, “he further said.

He stressed that the over N5 billion debt is affecting the market and investment into the power sector infrastructure.

“If the debts continue like this, how would the other players in the power sector value comprising of the transmission companies  and the gas generation companies won’t have funds to run the sector and invest in electricity infrastructure,” he added.

Many government agencies are indebted to operators in the power sector, a situation energy analysts affirm is negatively impacting the sectoral liquidity flow and operational growth of the power sector.

Notably, most of the support commitments to the Nigerian power sector from the World Bank and the African Development Bank are largely hinged on addressing liquidity concerns and efficient market reforms.

If Nigeria’s power sector continues to incur debts, analysts say Nigeria stands the risk of losing some of the funding support from global lending bodies due to a lack of sustainable reforms.

The debts from the MDAs have also had negative impacts on Discos upgrading their power infrastructure such as transformers and cables because of poor financial records and losses.

“Market reforms are key if we progress in the power sector. MDAs shouldn’t be owing electricity debts, it is not a good sign for the market and the investors, “a power sector governance expert, Chuks Nwani told The ICIR.

The notice for the MDA debts reportedly read, “This is to inform the general that AEDC will disconnect all customers with outstanding electricity bills on June 3, 2024.

“Timely payment of electricity bills is crucial for the continued operation and enhancement of AEDC’s infrastructure, ensuring we can deliver efficient and reliable service to our community.”

Some of the affected MDAs include the Nigeria Army, the Nigeria Airforce, the Defence Headquarters, the Nigeria Police Force (HQ), the Office of the Secretary to the Government of the Federation (SGF), the Ministry of Industry, Trade and Investment, and the Ministry of Women Affairs. 

Table showing some of the MDA’s accused of not paying electricity bill.

Others are the Ministry of Interior, the Ministry of Water Resources, the Ministry of Finance, and the Ministry of Works. 

Findings from the 2023 approved budget showed that the security agencies, Army, Police, and Defence HQ, received the highest electricity allocation amidst the 11 MDAs survey. (See the breakdown below).

Table showing the breakdown of electricity charges approved in the 2023 budget 

A recurring complaints

Although, the AEDC did not state how much each of these MDAs owed, several media reports have indicated that some MDAs, as far back as 2017, have been notorious for owing electricity charges worth billions, despite the federal government’s yearly allocation. 

In September 2021, The ICIR reported that some MDAs owe distribution companies (DISCOs) up to N202 billion. The MDAs’ debts were classified into N48 billion verified debts and  N61 billion unverified debts. However, the amount did not include the estimated N93 billion owed by Armed Forces and Security Agencies in Nigeria.

In another report, in 2021, the electricity charged owed by the MDAs and para-military was pegged at N90 billion.

Meanwhile, there was a subsequent report that the federal government earmarked N40 billion to clear the electricity bill for these MDAs. But with the recent statement by AEDC, there are concerns about whether the payment has been made with a threat to cut power supply to MDAs.

Recall that in February 2024, AEDC had threatened to disconnect 84 MDAs over an unpaid debt of N47.1 billion. 

Some of the MDAs include the Ministry of Finance, Information, Budget, Works and Housing, barracks, Nigeria Police Force, Presidential Villa, CBN Governor, Economic and Financial Crimes Commission (EFCC), Federal Inland Revenue Service (FIRS), Federal Airports Authority of Nigeria (FAAN), state liaison offices in the Federal Capital Territory (FCT) and others. 

In most cases, rather than pay up, the MDAs have employed a strategy of disputing the debts and calling for audits and reconciliation of bills over several years.

Consequently, the DISCOs owe other power sector stakeholders and have transferred the cost to ordinary citizens through estimated billing and other unfair practices.

Government, AEDC keep silent 

To verify if the allocation was made to the MDAs, The ICIR checked the Budget Implementation Report (BIR) for 2023. Although only the first quarter BIR document has been published, nothing in the documents suggests if the allocation was paid or not.

The ICIR  also checked the Office of the Accountant General of the Federation website for the financial statement of the federal government with respect to recurrent expenditure. The last Consolidated General Purpose Financial Statements published was for 2020.

However, The ICIR  reached  out to the AEDC’s official spokesperson, Adefisayo Adesanya, to verify the total debt owed by the MDAs, whether the disconnection has been effected, and if there has been any response from the MDAs to clear their debts.

Adesanya said, “I am in a meeting and  would get back to the report”. after calling repeatedly, she did not respond to the calls and did not revert on the inquiry about possible disconnection of debtor MDAs.