Darkness may soon fall over Nigeria as power generation companies (GenCos) issue a stark warning of a potential shutdown due to overwhelming unpaid debts.
The crisis is a result of the federal government and other market operators owing over N4 trillion to the GenCos, which is crippling their ability to generate electricity.
Chairman of the Board of Trustees for the GenCos, Rtd. Colonel Sani Bello, shared these concerns with journalists in Abuja on Monday, stressing the gravity of the situation.
According to Bello, the unpaid debts, which have been accumulating for some time, are now threatening the very existence of power generation in Nigeria. He noted that the power generated by GenCos is being consumed by the public, but the corresponding payments are not being made.
“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,” he stated.
Of the N4 trillion owed, N2 trillion is for electricity generated in 2024 alone, while the remaining N1.9 trillion represents legacy debts. The GenCos have raised alarms that the N900 billion allocated to the power sector in the 2025 national budget is grossly inadequate to address these arrears and sustain future operations.
Bello described the situation as a “clear departure from existing terms of the Power Purchase Agreement,” explaining that under the current conditions, GenCos only receive about 9-11 percent of their invoices, while other service providers and regulatory bodies are being paid in full. This imbalance has contributed to the growing financial instability in the sector.
Another major concern for the GenCos is the declining rate of payment collection, which dropped below 30 percent in 2024. This sharp decrease has exacerbated the already critical liquidity crisis. “The crises from cash liquidity are on the top burner and have reduced GenCos’ ability to continue to perform their obligations,” Bello explained.
Adding to their difficulties are the rising operational costs that are denominated in U.S. dollars, alongside limited access to foreign exchange.
The GenCos have called for the creation of a specialized window or stable dollar allocation option to help mitigate this challenge. Bello stressed, “The importance of a specialised window or stable dollar allocation option for the GenCos cannot be overemphasised.”
To avoid a complete shutdown, the GenCos are urging the government to take urgent action. They are demanding full settlement of the outstanding invoices, a reprioritization of the waterfall payment structure, and guarantees backed by reputable institutions such as the World Bank and the African Development Bank (AfDB).
“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 concluded.
