Key Points
- Power Generation Companies (GenCos) in Nigeria are grappling with a massive N6.8 trillion debt burden that is threatening operational stability.
- The debt includes outstanding invoices dating back to 2015, capacity payments, foreign exchange differentials, and accrued interest.
- While plants have not shut down entirely, several units are reportedly going offline due to a combination of gas shortages, maintenance delays, and funding constraints.
- Stakeholders are calling for a coordinated effort to reconcile these obligations and adjust tariffs to reflect the actual cost of ancillary services.
Main Story
Power generation companies in Nigeria reported significant operational challenges linked to a N6.8 trillion debt burden, which officials stated is complicating efforts to maintain a steady electricity supply.
Dr Joy Ogaji, Chief Executive Officer of the Association of Power Generation Companies (GenCos), disclosed on Tuesday that the sector is navigating intense financial and operational pressures.
She noted that while the industry has not reached a total shutdown, several generation units are progressively going offline as maintenance and funding gaps widen across the country.
According to Dr Ogaji, the current supply fluctuations across the national grid reflect deeper structural issues, including infrastructure demands and workforce pressures.
She explained that the N6.8 trillion obligation is a cumulative figure representing unpaid electricity generated over the last decade, alongside capacity payments and losses incurred through currency fluctuations.
GenCos are reportedly engaged in ongoing discussions with the Nigerian Bulk Electricity Trading Company (NBET) to reconcile these figures, with the last formal alignment having occurred in March 2025.
The Issue
The core crisis involves a “Liquidity Trap” where the cost of keeping plants running is not being fully recovered through existing tariffs. GenCos pointed out that operational costs for essential services—such as plant start-ups, shutdowns, and the Free Governor Mode of Operation (FGMO)—are often not reflected in the financial framework. This mismatch, compounded by legacy debts, has made it difficult for operators to pay gas suppliers or invest in critical infrastructure repairs. Without a resolution to the debt reconciliation process, the ability of GenCos to utilise their full installed capacity remains severely limited by both financial and transmission constraints.
What’s Being Said
- “We have not shut down, but some units are going offline progressively, not only due to gas supply issues, but also maintenance and funding challenges,” stated Dr Joy Ogaji.
- She emphasised that operators are working to sustain operations, but “current financial obligations have created constraints across the value chain.”
- Discussions with NBET are focused on “reaching alignment on the figures” to ensure all outstanding invoices and accrued interests are accurately captured.
- Industry leaders stressed that the focus must remain on “strengthening the sector through coordinated action and adherence to established frameworks.”
What’s Next
- GenCos and NBET are expected to fast-track the reconciliation of the N6.8 trillion debt to unlock much-needed liquidity for the sector.
- Stakeholders are pushing for an update to the tariff structure to include previously ignored operational costs like ancillary services.
- Observers will be monitoring gas supply levels to see if the recent government bond issuances for debt clearance result in more fuel reaching the power plants.
- Coordinated efforts between the Ministry of Power and private operators will be critical to ensuring that more generation units do not go offline during the current period of high demand.
Bottom Line
The N6.8 trillion debt is a ticking clock for Nigeria’s power stability. While GenCos are committed to keeping the lights on, the progressive loss of generation units indicates that the sector’s “operational goodwill” is stretching thin. Only a full financial reconciliation and a transition to cost-reflective pricing for all services will prevent a wider energy crisis.
