Nigeria’s power sector is on the brink of collapse as electricity generation companies (GenCos) issued a grave warning on Monday, stating they may no longer be able to guarantee power supply due to a deepening liquidity crisis now topping N4 trillion in unpaid debts.
Under the umbrella of the Association of Power Generation Companies, the GenCos said the mounting financial pressure fueled by years of underpayment for electricity supplied to the national grid could soon force them to shut down operations.
In a statement signed by the group’s Chairman of the Board of Trustees, Col. Sani Bello (retd.), the GenCos urged the Federal Government to act immediately to avoid a full-scale collapse of Nigeria’s electricity value chain.
“The current situation, if not addressed urgently, threatens not only the operations of GenCos but could trigger serious national security concerns if power generation ceases,” the statement said.
Unequal Payments Deepen the Strain
The GenCos criticized the Nigerian Bulk Electricity Trading Plc (NBET) for what they described as lopsided disbursement of market payments under the Nigerian Electricity Supply Industry’s (NESI) “waterfall arrangement.” According to them, while other service providers reportedly receive full payment of their market invoices, GenCos are left with as little as 9% to 11% of what is owed.
Despite producing the electricity consumed on the national grid, the GenCos say they have been systematically shortchanged, leaving them unable to meet operational expenses such as equipment maintenance, staffing, and crucial gas supply payments.
“The continued neglect of generation companies in the financial structure of the market is unsustainable,” they stressed.
Breakdown of the Debt
The Federal Government has already acknowledged the scale of the debt crisis. In February, Minister of Power Adebayo Adelabu revealed that GenCos and distribution companies (DisCos) are owed over N4 trillion in subsidies and legacy debts.
- N2 trillion represents legacy debts owed to GenCos.
- An additional N1.9 trillion is subsidy-related debt for electricity generated in 2024.
- DisCos are owed N450 billion for their subsidy entitlements in the same period.
Call for Urgent Financial Intervention
The GenCos have appealed to the Federal Government and relevant stakeholders to urgently develop a clear financing strategy to salvage the sector. Without prompt intervention, they warned, the entire electricity supply chain—already plagued by instability and underperformance—could face total shutdown.
“Liquidity has now become the leading crisis in the sector, threatening the entire value chain and the country’s ability to sustain power generation,” the group said.
As Nigeria continues to struggle with unreliable power supply, the warning from GenCos adds new urgency to ongoing efforts at reforming and stabilizing the energy sector under the government’s Electricity Act 2023 and related initiatives.
