Ajaokuta steel plant faces disconnection threat due to N25 billion debt

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Ajaokuta steel plant faces disconnection threat due to N25 billion debt
Ajaokuta steel plant faces disconnection threat due to N25 billion debt

Nigerian Electricity Regulatory Commission (NERC) has issued a warning that the Ajaokuta Steel Company Limited faces the imminent threat of disconnection from the national electricity grid due to its substantial debt amounting to N25.06 billion.

This financial liability was disclosed in the NERC’s 2022 annual report.

The regulatory commission has cautioned that failure to resolve this outstanding debt could jeopardize both the Ajaokuta complex and its neighboring community, as its service providers, Nigerian Bulk Electricity Trading (NBET) Plc and the market operator (MO), are considering the disconnection of their services.

According to the statement released by NERC, the Ajaokuta Steel Company Ltd and the adjacent community received electricity supply from the Nigerian Electricity Supply Industry (NESI) in 2022.

However, the Ajaokuta Steel Company Ltd displayed a concerning pattern of non-payment, with no payments made towards the substantial N1.39 billion owed to the Nigerian Electricity Regulatory Commission, as well as the N0.27 billion invoices from NBET and MO in 2022.

NERC emphasized that both the market operator (MO) and NBET must take appropriate actions to protect against the continued non-settlement of market obligations by these entities.

No payments were received from the special customers, namely the Ajaokuta Steel Company Ltd and its host community, for the N1.39 billion and N0.27 billion energy invoices and service charges issued by NBET and MO, respectively.

As of December 31, 2022, the total debt owed by Ajaokuta to NBET and MO stood at N22.98 billion and N2.08 billion, respectively.

This debt encompasses an outstanding invoice amount of N8.62 billion, accompanied by accrued interest totaling N14.36 billion.

The NERC has emphasized that addressing the Ajaokuta issue is a matter of great concern, and discussions have been held with relevant federal ministries to identify a lasting solution to the issue of non-payment of electricity bills.

However, the Ajaokuta complex remains at risk of disconnection by its service providers, NBET and MO, due to its severe indebtedness if this matter is not promptly resolved.