Ajaokuta Steel risks power cut over N5.46bn debt
Nigeria's Ajaokuta Steel Company and its host community face electricity disconnection due to an outstanding N5.46bn debt for energy invoices and service charges.
Intelligence analysis by Gemini 2.5 Flash
The Nigerian Electricity Regulatory Commission (NERC) revealed that the Ajaokuta Steel Company Limited and its host community failed to pay N4.96bn for energy and N500m in service charges in 2025, accumulating a total debt of N5.46bn. NERC has escalated the issue to federal ministries, warning that non-payment could lead to disconnection, further jeopardizing the long-stalled steel co…
Imagine a really big, old factory that was supposed to make steel but hasn't really worked for a long, long time. Even though it's mostly quiet, it still uses electricity, like keeping the lights on. But this factory hasn't paid its electricity bill, which is a huge amount of money, N5.46bn! Now, the company that supplies the electricity is saying if they don't pay up, they might turn off the power completely. This is a big problem because the government wants to get the factory working again, but it's hard when they can't even pay for electricity.
Analysis
The revelation by the Nigerian Electricity Regulatory Commission (NERC) regarding Ajaokuta Steel Company Limited's N5.46bn electricity debt casts a significant shadow over the Federal Government's renewed efforts to revive the long-dormant complex. This substantial outstanding obligation, accumulated from unpaid energy invoices and service charges in 2025, points to deep-seated financial mismanagement or systemic issues that continue to plague the steel plant decades after its initial construction.
N5.46bn
The staggering N5.46bn debt owed by Ajaokuta Steel and its host community to the Nigerian Bulk Electricity Trading Plc (NBET) and the Market Operator is a critical indicator of the complex's operational and financial distress. NBET, responsible for bulk electricity trading, issued an energy invoice of N4.96bn, while the Market Operator charged N500m for services, neither of which received any payment. This non-remittance not only threatens the steel company's power supply but also exacerbates the liquidity challenges within the Nigerian Electricity Supply Industry (NESI). The NERC's report explicitly states that such unpaid bills undermine the sustainability of the entire electricity market, affecting other participants who rely on timely payments.
Nigerian Electricity Regulatory Commission
The Nigerian Electricity Regulatory Commission's role in disclosing this debt and escalating the matter to relevant federal ministries underscores the gravity of the situation. While NERC has issued similar warnings in the past without immediate corresponding actions, the current disclosure in its 2025 Annual Report suggests a heightened level of concern. The commission's mandate is to regulate the electricity sector, and the persistent non-payment by a major government-linked institution like Ajaokuta Steel poses a significant challenge to its regulatory authority and the stability of the market. The call for federal intervention highlights that the issue extends beyond mere commercial dispute, requiring high-level political will to resolve.
International Bilateral Customers
Interestingly, the NERC report also provides a comparative perspective by detailing the remittance performance of international bilateral electricity customers versus local counterparts. International customers, including Société Nigérienne d’Électricité, Société Béninoise d’Énergie Électrique, and Compagnie Énergie Électrique du Togo, achieved an 84.90 percent remittance performance on a combined invoice of $73.91m. In contrast, local bilateral customers showed a higher remittance performance of 96.60 percent on N13.20bn. This comparison implicitly highlights Ajaokuta's exceptionally poor performance, standing out as a significant outlier. The stark difference in payment discipline between these various customer segments further emphasizes the unique and severe nature of Ajaokuta's financial obligations and the broader difficulties in ensuring payment compliance across all consumer categories within Nigeria's power sector.
Key points
- Ajaokuta Steel Company Limited and its host community owe N5.46bn in unpaid electricity bills.
- The debt comprises N4.96bn for energy invoices from NBET and N500m for service charges from the Market Operator in 2025.
- The Nigerian Electricity Regulatory Commission (NERC) disclosed the debt and has escalated the issue to federal ministries.
- NERC warned that failure to settle the obligations could lead to the complex being disconnected from its service providers.
- The debt highlights financial challenges confronting the complex amid renewed government efforts to revive it.
The Nigerian Electricity Regulatory Commission's escalation of the issue to relevant federal ministries could lead to a decisive government intervention, potentially clearing the outstanding debt and implementing a sustainable payment plan. This would remove a major hurdle for the Ajaokuta Steel Complex's revival, allowing the government's renewed efforts to proceed without the immediate threat of power disconnection.
Failure by Ajaokuta Steel to settle its N5.46bn electricity debt could result in its disconnection from power supply, further crippling any attempts to reactivate the complex. This would deepen its moribund status, waste past investments, and signal continued financial instability within key government-linked institutions, impacting the overall confidence in Nigeria's industrial development initiatives.