Nigeria’s power sector is on the edge of collapse as electricity generation companies (GenCos) have warned they may shut down operations due to a staggering N4 trillion debt.
In a press release issued Monday, the Association of Power Generation Companies, through its Chairman, Col. Sani Bello (retd.), raised serious concerns about the liquidity crisis plaguing the industry. The statement emphasized that the GenCos can no longer guarantee a steady supply of electricity unless urgent action is taken by the Federal Government.
According to the GenCos, the continuous failure to pay for electricity already consumed on the national grid is crippling their operations. They described the current financial situation as unsustainable, revealing that power plants could be shut down soon if no intervention is made.
The GenCos further accused the Nigerian Bulk Electricity Trading Plc and other industry players of marginalizing them through the “waterfall arrangement”—a policy where other electricity market participants receive full payments while GenCos get just 9% to 11% of their due.
“The situation has made it nearly impossible for us to operate effectively,” the GenCos lamented. “We are calling on the Federal Government to take immediate steps to rescue the power sector from total breakdown.”
The minister of power, Adebayo Adelabu, had earlier confirmed that the government owes over N4 trillion in electricity subsidies—N2 trillion of which is a legacy debt to GenCos, and another N1.9 trillion is owed as part of the 2024 electricity subsidy. Additionally, DisCos (distribution companies) are owed N450 billion.
As the sector battles worsening fiscal and operational challenges, the GenCos warn that failure to act swiftly could lead to a national security threat, given the country’s heavy dependence on electricity.
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