Nigeria’s power generation companies (GenCos) have sounded the alarm over a looming shutdown of power plants across the country, citing a staggering N4 trillion debt owed by the Federal Government as the primary cause.
The GenCos, operating 40 power-generating plants connected to the national grid alongside independent power providers and the Niger Delta Holding Company, issued a statement on Monday under the Association of Power Generation Companies (APGC). The statement was signed by APGC Board of Trustees Chairman, Colonel Sani Bello (retd).
According to the statement, the Federal Government owes GenCos N2 trillion for power supply in 2024, in addition to N1.9 trillion in legacy debts accumulated over the years.
The GenCos revealed that they currently receive less than 30 per cent of their monthly invoices for power delivered to the national grid.
“It is no longer news that the power generation companies have continued to bear the brunt of the liquidity crisis in the Nigerian Electric Supply Industry (NESI). GenCos, on their part as responsible investors with patriotic zeal, have made large-scale investments and have continued to demonstrate absolute commitment by ramping up capacities in line with their contracts over the past ten years, despite system constraints, policies and regulations that are not investor-friendly, increasing debts owed by the Federal Government without a clear financing plan, lack of firm contracts, and a market without securitisation but based on best endeavours, thereby hampering future planning.”
Despite the persistent financial challenges since the privatization of the power sector in 2013, GenCos said they have honoured their contractual obligations by scaling up generation capacity, though much of it remains underutilized due to systemic bottlenecks.
“Notwithstanding this and other severe difficulties that the GenCos have endured since the takeover in 2013, they have kept to the terms of their contractual agreements by ramping up capacity, which has been largely constrained systemically.”
The GenCos emphasized that the worsening cash liquidity crisis now threatens their ability to sustain electricity generation, placing the entire power value chain at risk.
“Against the backdrop of the many challenges facing the power sector in Nigeria, the crises arising from cash liquidity are at the forefront and have reduced the GenCos’ ability to continue to perform their obligations, thereby threatening to completely undermine the electricity value chain.”
They also expressed disappointment over failed expectations of support from external bodies like the World Bank, citing unmet conditions by other players in the industry.
“The GenCos’ expectations of being settled through external support such as the World Bank PSRO have also been dampened due to other market participants’ inability to meet their respective distribution-linked indicators (DLIs), enshrined in the Power Sector Recovery Programme (PSRP).”
The statement warned of potential national security implications if urgent interventions are not made.
“In light of the severity of the issues highlighted above, the GenCos are requesting that immediate and expedited action be taken to prevent national security challenges that may result from the failure of the GenCos to sustain steady electricity generation for Nigerians.”
The GenCos pointed out that the 2024 collection rate has dropped below 30 per cent, and prospects for 2025 appear even worse. They noted that the government’s 2025 budget allocates just N900 billion to the sector—far below what is needed to address arrears and upcoming obligations.
“The 2024 collection rate has dropped below 30 per cent, and 2025 is no better, severely affecting the GenCos’ ability to meet financial obligations. Tax and regulatory challenges, including high corporate income tax, concession fees, royalty charges, and new FRC compliance obligations, are further straining the GenCos’ revenue. GenCos are currently owed about N4 trillion (N2 trillion for 2024 and N1.9 trillion in legacy debts). No possible solutions, including cash payments, financial instruments, or debt swaps, are in sight.”
The statement also criticized the failure of key regulatory and market reforms to ease the financial burden, including the Partial Activation of Contracts that began in July 2022.
“The 2025 government budget allocates only N900 billion, raising concerns about its adequacy to cover arrears and future payments. The power generated by the GenCos continues to be consumed in full without corresponding full payment.
This is despite the commencement of the Partial Activation of Contracts in NESI, which took effect from 1 July 2022, the minimum remittance order, bilateral market declaration, waterfall arrangement, inflation risks, foreign exchange volatility with no dedicated window to cushion the effects of forex impacts, and the supplementary MYTO order.
This leaves about 90 per cent of GenCos’ monthly invoices unmet without a bankable securitisation or financing plan. This situation has dire consequences for the GenCos and, by extension, the entire power value chain,” the statement read.
The APGC concluded by urging the Federal Government to urgently implement a structured payment plan to address all outstanding debts, stressing that the persistent lack of capital investment remains a key barrier to improving power supply across the country.
