FG Probes Ajaokuta Steel Over N33bn Electricity Debt
Federal Government, on Thursday, said it would investigate how the non-functioning Ajaokuta Steel Company Limited (ASCL) accumulated N33bn electricity debt, which prompted the Transmission Company of Nigeria (TCN) to disconnect the company from the national grid.
Minister of Steel Development, Prince Shuaibu Abubakar Audu, disclosed this to State House correspondents after meeting President Bola Tinubu at the Presidential Villa, Abuja, on Thursday.
The Transmission Company of Nigeria (TCN) recently disconnected ASCL from the national grid as the moribund company failed to clear a debt of N33bn owed to the NBET and service providers.
The N33bn comprises N30.85bn for energy and capacity delivered by NBET and N2.22bn owed to service providers.
Addressing correspondents, Audu vowed to consider the matter. He expressed surprise at how the company accumulated such debt in electricity consumption when it had not been operating at full capacity.
“I mean these are some of the things that need to be clearly looked into. One of the things I spoke to the MD of Ajaokuta today, and this was one of the questions I asked and we’re going to get to the bottom of it: why consumption of so much electricity in a place that is not operating at full capacity?
“Part of what we also need to do is that we’re trying to revive Ajaokuta in a collegiate system, in piecemeal, and so we may not have the capacity to be able to pay all those outstanding amounts immediately.
“Part of what the MD of Ajaokuta told me is that most of the money is in interest payments. And NBET, the electricity company that has disconnected it, is also a government agency,”, Audu explained.
TCN had in a letter signed by the Acting Executive Director Independent System Operator, E.A. Eye, suspended services at the Ajaokuta Steel Company Limited (ASCL) over the failure of the company to settle N33bn owed to the Nigerian Bulk Electricity Trading PLC (NBET) and Service Providers.
Dated January 4, 2024, the letter explained that the debt comprised N30,849,749,981.01 for energy and capacity delivered by NBET and N2,221,252,148.48 debt owed to Service Providers.
“This is a formal suspension notice to ASCL due to non-compliance with provisions of the Market Rules as of the November 2023 billing cycle, ASCL has accumulated a total outstanding debt of N33,071,002,129.49, comprising N30,849,749,981.01 for energy and capacity delivered by NBET and N2,221,252,148.48 owed to Service Providers.
“On the 20th of March 2023, the MO issued a notification to ASCL for non-compliance with the Market Rules and requested corrective actions within a specified period, as advertised in three national newspapers.
“Despite a ministerial intervention by the Honorable Minister of Power, which temporarily halted enforcement actions to allow Ajaokuta Steel Company Limited (ASCL) the opportunity to rectify its defaults, these defaults remain unresolved.
“Failure to rectify these defaults within the specified period will lead to the disconnection of ASCL’s network from the National Grid, in accordance with section 45 of the Market Rules,” the letter read.
TCN said Ajaokuta Steel must pay off all outstanding invoices and provide a Bank Guarantee of N70,177,727.39 for MO’s invoice and N320,000,000.00 for NBET’s invoice within 14 days from the date of the notice to avoid disconnection from the National Grid.