NERC: Ajaokuta Steel N5.46bn Power Disconnection Risk Looms Over Unpaid Debt

• The Ajaokuta Steel Company Limited and its host community face a N5.46 billion electricity debt, risking power disconnection.
• This debt includes N4.96 billion for energy from NBET and N500 million in service charges from the Market Operator, both unpaid in 2025.
• The Nigerian Electricity Regulatory Commission (NERC) has warned of potential service disconnection and escalated the issue to federal ministries.
• The non-payment highlights broader financial challenges for government-linked institutions and impacts the Nigerian Electricity Supply Industry's liquidity.
• NERC's 2025 Annual Report revealed these outstanding obligations amid renewed government efforts to revive the long-inactive steel complex.

The Ajaokuta Steel N5.46bn power disconnection risk serves as a stark reminder of the consequences of persistent non-payment in a sector striving for financial viability and operational efficiency.

The Nigerian Electricity Regulatory Commission (NERC) has issued a stern warning that the Ajaokuta Steel Company Limited, along with its host community, is at significant risk of having its electricity supply severed. This potential disconnection is a direct consequence of outstanding financial obligations amounting to N5.46 billion. According to NERC's recently released 2025 Annual Report, the steel complex and its surrounding area failed to remit any payments for energy invoices and service charges throughout the year.

Specifically, the Ajaokuta Steel Company Limited received an energy invoice totaling N4.96 billion from the Nigerian Bulk Electricity Trading Plc (NBET) in 2025, for which no payment was made. Additionally, the company neglected to settle a N500 million service charge invoice issued by the Market Operator. These combined arrears bring the total outstanding electricity debt to N5.46 billion, directly contributing to the Ajaokuta Steel N5.46bn power disconnection risk.

NERC has expressed considerable concern regarding this persistent non-payment, indicating that the issue has been escalated to relevant federal government ministries in an effort to find a lasting solution. The regulatory body explicitly warned that if Ajaokuta fails to meet its financial commitments, its service providers, including NBET and the Market Operator, may proceed with disconnection on grounds of gross indebtedness. This situation underscores the escalating enforcement regarding unpaid electricity bills, particularly for large consumers.

The NERC's report highlights a broader systemic challenge within the Nigerian Electricity Supply Industry (NESI), where unremitted bills continue to undermine the liquidity and overall sustainability of the market. The Market Operator is tasked with administering the commercial operations of the electricity market, while NBET functions as the crucial intermediary for bulk electricity trading between power generators and distribution companies. The substantial NERC Ajaokuta Steel electricity debt is emblematic of financial difficulties encountered by certain government-linked institutions and other major power consumers across the nation.

In its 2025 report, NERC also provided a comparative analysis of remittance performance across various customer categories. International bilateral electricity customers, which include Société Nigérienne d’Électricité, Société Béninoise d’Énergie Électrique, and Compagnie Énergie Électrique du Togo, collectively received invoices totaling $73.91 million for ancillary services provided by the Market Operator. Their payments amounted to $62.75 million, achieving an 84.90 percent remittance rate. In contrast, local bilateral customers demonstrated a higher performance, remitting N12.75 billion out of N13.20 billion in invoices for ancillary services, resulting in a 96.60 percent remittance performance. This disparity further emphasizes the critical nature of the Ajaokuta Steel Company Limited power cut threat in the context of broader Nigerian electricity market liquidity.

The current threat of disconnection for the Ajaokuta Steel Complex emerges amidst renewed efforts by the Federal Government to revitalize the facility, which has remained largely dormant for decades since its initial construction. This significant electricity debt, including the NERC Ajaokuta Steel electricity debt, casts a shadow over these revival initiatives, exposing deep-seated financial issues. The Market Operator N5.46bn debt is not an isolated incident; NERC has previously issued similar warnings regarding Ajaokuta's non-payment, though these past threats did not result in actual disconnections.

However, the explicit warning contained within the 2025 Annual Report, coupled with the escalation of the matter to federal ministries, suggests a potentially more resolute stance from the regulator. The ongoing financial challenges posed by entities like Ajaokuta impact the entire Nigerian electricity market liquidity, making it imperative for all participants to fulfill their obligations. The Ajaokuta Steel N5.46bn power disconnection risk serves as a stark reminder of the consequences of persistent non-payment in a sector striving for financial viability and operational efficiency.

Lawyers and compliance officers advising large electricity consumers, particularly government-linked entities in Nigeria, should note NERC's escalating enforcement regarding unpaid electricity bills. This signals a heightened risk of service disconnection for clients with significant outstanding obligations, necessitating proactive advice on debt resolution and compliance with market financial requirements.

Source: Original reporting via Punch Newspapers