Nigeria’s efforts to promote regional cooperation through electricity exports have hit a snag, as neighboring countries Benin, Togo, and Niger owe the country a staggering N64.7 billion ($42 million) in unpaid electricity bills. This debt crisis threatens to undermine the benefits of regional cooperation and the integration of West Africa’s power markets.
Nigeria exported over N64.7 billion ($42 million) worth of electricity to neighbouring Benin Republic, Togo, and Niger in the first nine months of 2024.
This comes as these bilateral customers struggle with outstanding invoices, according to the latest quarterly reports from the Nigerian Electricity Regulatory Commission (NERC).
The reports revealed that international customers made cumulative payments of $39.44 million during the period but failed to remit approximately $2.56 million, reflecting ongoing remittance challenges for domestic and international electricity customers.
In the first quarter of 2024, none of the international bilateral customers settled the $14.19 million invoices issued by the market operator. However, two customers later paid $5.96 million towards outstanding debts from previous quarters.
The international customers are directly supplied by generation companies, with Mainstream Energy providing power to Société Nigérienne d’Électricité (NIGELEC), while Paras Energy and Transcorp supply power to Société Béninoise d’Énergie Electrique (SBEE), Nigeria Delta Power Holding Company (NDPHC), and Togo.
By the second quarter of 2024, payment performance slightly improved, with international customers remitting $9.81 million out of $15.60 million in invoices, resulting in a 62.88 per cent remittance rate.
Some payments were also made towards outstanding debts, bringing the total payments by international customers during the period to $16.65 million. However, payment compliance declined again in the third quarter, with six international customers paying only $6.49 million out of $12.19 million invoiced, representing a 53.24 per cent remittance rate. Additional payments of $1.33 million were also made towards overdue debts.
In its quarterly reports, NERC highlighted the persistent payment indiscipline among both domestic and international bilateral customers. For example, domestic customers made payments of N1.30 billion in the second quarter of 2024, covering 65.07 per cent of invoices issued, and N1.57 billion in the third quarter, covering 74.57 per cent, though a significant portion of outstanding invoices remained unpaid.
Nigeria has been exporting electricity to its West African neighbors through the Nigerian Electricity Regulatory Commission (NERC). The country’s power grid is connected to those of Benin, Togo, and Niger, allowing for the exchange of electricity. This regional cooperation aims to promote economic development, improve living standards, and enhance energy security in the region.
Despite the benefits of this regional cooperation, the neighboring countries have struggled to pay their electricity bills. The outstanding debts have been accumulating over time, with Benin, Togo, and Niger failing to remit approximately $2.56 million in the first nine months of 2024. This debt crisis raises concerns about the sustainability of regional cooperation and the financial stability of Nigeria’s electricity sector.
The Nigerian Electricity Regulatory Commission (NERC) has expressed concerns over the unpaid debts, warning that continued non-payment could disrupt the regional electricity supply. NERC has urged the Federal Government to intervene in the matter, seeking a lasting solution to the debt crisis. The commission’s concerns highlight the need for prompt action to address the debt crisis and ensure the sustainability of regional cooperation.
The unpaid debts pose a significant risk to regional cooperation and the integration of West Africa’s power markets. Nigeria’s efforts to boost electricity exports and promote regional cooperation may be undermined if the neighboring countries fail to honor their financial obligations. This could lead to a decline in regional trade, economic development, and energy security.
To address the issue, the Nigerian government and NERC must engage in diplomatic efforts to resolve the debt crisis. This may involve renegotiating payment terms, providing technical assistance to improve the neighboring countries’ payment systems, or exploring alternative payment arrangements. Ultimately, the success of regional cooperation in West Africa’s power sector depends on the ability of participating countries to honor their financial obligations. Nigeria must take a firm stance on the issue, while also exploring diplomatic solutions to ensure that the benefits of regional cooperation are shared equitably among all parties involved.
