Nigeria’s power generation companies (GenCos) have threatened to cease operations due to an outstanding debt of over N4 trillion owed by the Federal Government.
The warning was issued by the Association of Power Generation Companies in a statement titled “Unpaid Invoices Exceeding N4 Trillion Threaten GenCos,” released on Monday and signed by its Chairman, Board of Trustees, Col. Sani Bello (retd.).
According to the statement, the GenCos are grappling with mounting financial strain resulting from unpaid invoices for electricity generated and fed into the national grid. Bello warned that the continued non-payment threatens not just the operations of GenCos but the stability of Nigeria’s entire electricity value chain.
“The Power Generation Companies are constrained to issue this press release to draw the attention of the Federal Government and key stakeholders to the urgent need to address the inadequate payment for electricity generated and consumed on the national grid,” he stated.
He noted that GenCos are currently owed about N4 trillion—N2 trillion for 2024 and N1.9 trillion in legacy debts—with no clear path for settlement through cash payments, financial instruments, or debt swaps. Meanwhile, the 2024 budget allocates just N900 billion to the power sector, raising serious concerns about the adequacy of funds to cover existing arrears and ongoing obligations.
“The 2024 collection rate has dropped below 30 per cent, and 2025 shows no signs of improvement, severely affecting our ability to meet financial commitments,” the statement continued. “Other challenges include high corporate taxes, concession fees, regulatory compliance costs, and the absence of a forex window to hedge against volatility.”
Despite reforms such as the Partial Activation of Contracts in the Nigerian Electricity Supply Industry (NESI), the statement said about 90 per cent of GenCos’ monthly invoices remain unpaid, with no viable financing or securitisation plan in place.
In response to the looming crisis, the Minister of Power has expressed concern and assured stakeholders of ongoing efforts to resolve the debt issue. The assurance came after distribution companies signaled plans to initiate a shutdown on Monday if no action was taken.
Bolaji Tunji, Special Adviser to the Minister of Power, acknowledged the severity of the situation, stating that the government is working with the Ministry of Finance to find a solution.
“We are not unaware of this debt, which stems from the Federal Government’s subsidy commitments—some of which are legacy debts predating the current administration,” Tunji said. “The Minister is actively engaged with the Ministry of Finance to ensure that the debt is addressed promptly.”
He emphasized that the government understands the implications of continued indebtedness on the power sector and is committed to finding a resolution.
