Nigeria is presently facing threats of impending darkness as power generation companies prepare to shut down operation following a N4tn debt. The federal government’s and other market operators’ outstanding debts have continued to rise, raising concerns
Threats were disclosed to reporters in Abuja on Monday by Rtd. Colonel Sani Bello, the chairman of the GenCos’ Board of Trustees.
The power generation companies (GenCos) bemoaned how their operations were being crippled by the growing liabilities, which threatened to completely shut down Nigeria’s electricity generation.
Bello said “The power generated by GenCos has continued to be consumed in full without corresponding payment.
“This situation has dire consequences for the GenCos and, by extension, the entire power value chain,”
Reports reveal that of the N4 trillion outstanding, N1.9 trillion is for legacy debts, and N2 trillion is for power produced in 2024.
The N900 billion allotted for the power sector in the 2025 national budget, according to GenCos, is woefully insufficient to settle those arrears and support further payments.
Under the current circumstances, GenCos only receive roughly 9–11% of their invoices, while regulatory agencies and other service providers are paid in full, Bello said, calling the scenario “a clear departure from existing terms of the Power Purchase Agreement.”
Additionally, the GenCos point to the severe decline in collection rates, which they claim has exacerbated the liquidity issue, falling below 30 percent in 2024.
The problem is made worse by limited access to foreign exchange and operational expenses that are expressed in US dollars.
“The crises from cash liquidity are on the top burner and have reduced GenCos’ ability to continue to perform their obligations,”
“The importance of a specialized window or stable dollar allocation option for the GenCos cannot be overemphasized,” Bello added.
GenCos further stated that they were calling for immediate government action, including assurances from organizations such as the World Bank and AfDB, reprioritization of the waterfall payment structure, and the full settlement of overdue invoices.
“There is a need for a coordinated approach by all stakeholders to address the liquidity issue realistically and sustainably. This request requires urgent attention,” Bello stated.
Bolaji Tunji, the Power Minister’s special adviser, however stated that the Federal government is not unaware of this debt, adding that the government is cognizant of it and is taking proactive measures to address the persistent problem.
He stated that the Ministry of Finance will shortly assume responsibility for the payment as part of the government’s actions.
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