Nigeria is on the brink of widespread power outages as gas suppliers begin cutting deliveries to power plants over an unpaid N5.6 trillion debt owed to electricity generation companies (GenCos).
The growing crisis has heightened fears over the stability of the national grid and the country’s ability to maintain a consistent electricity supply.
Dr. Joy Ogaji, Managing Director/CEO of the Association of Power Generation Companies (APGC), confirmed the situation in an interview on Thursday, warning that without immediate intervention, the nation could be plunged further into darkness.
Her warning follows a recent national grid collapse that left the country in a total blackout earlier in the week. While power generation has partially recovered—hovering around 4,000 megawatts—many power plants remain unable to operate at full capacity.
Ogaji explained that the power sector’s liquidity crisis is spiraling, with an additional N1.6 trillion debt accumulating between January and August 2025, pushing total arrears to N5.6 trillion. Despite GenCos’ commitment to sustaining power generation, she said the financial burden is making operations unsustainable.
She referenced a July 25, 2025 meeting between GenCos and President Bola Tinubu, where the president acknowledged a N4 trillion debt and promised to verify claims and implement a N4 trillion bond programme to address the shortfall. However, Ogaji lamented that nearly two months after that engagement, no concrete follow-up has taken place.
She noted that about 60% of GenCos’ revenue is allocated to gas suppliers. With payments in arrears, suppliers have started slashing gas supply—further straining an already fragile electricity market.
Ogaji also cited key operational challenges including machine maintenance, spare part procurement, and settlement of obligations to creditors. She warned that many vendors now prioritize clients who pay promptly, putting GenCos at a disadvantage.
Despite the patriotic intentions of operators to keep power flowing, she said the current market structure is unviable and incompatible with Nigeria’s growth goals. Without urgent reform, particularly involving the Federal Government, NBET, and NERC, she cautioned that private sector investment will continue to stall.
According to Ogaji, the average monthly invoice from GenCos is N270 billion, but only N70 billion is typically paid—leaving a monthly shortfall of N200 billion. She criticized the 2025 federal budget, which allocated N900 billion to the power sector without clear financial backing, describing it as grossly insufficient.
She also raised serious concerns about the government’s proposed plan to issue promissory notes as a way to settle the debts. She argued that the terms and conditions of these instruments remain unclear, and they pose significant financial risks including interest rate exposure, FX volatility, credit risk, and liquidity risk. Unlike bonds, she noted, promissory notes cannot be traded on the open market, which makes them risky for refinancing.
Ogaji stressed that GenCos cannot accept any terms that jeopardize their obligations to other creditors. Any breach of contract by the government, she warned, would have far-reaching financial implications for their operations and relationships with financial institutions.
She urged immediate engagement between the Federal Government, NERC, the Debt Management Office, and NBET to find workable solutions. She also questioned whether the proposed promissory notes would be limited to GenCos or extended to other contractors—raising concerns that power producers may not receive priority.
“GenCos have remained patriotic in their investments, but patriotism alone doesn’t generate electricity. Without urgent government action, the country faces the real risk of prolonged and devastating blackouts,” she said.
Efforts to reach the Minister of Power, Adebayo Adelabu, for comment were unsuccessful, as his spokesperson, Bolaji Tunji, did not respond to calls or messages.
Meanwhile, the Transmission Company of Nigeria (TCN) reported modest recovery in power generation, which had climbed to around 4,000 megawatts as of Thursday. However, many power stations are still struggling to resume full output, underscoring the precarious state of the national grid.
Industry experts warn that unless the government urgently addresses the liquidity crunch and rising debt burden, Nigeria’s electricity sector could inch closer to systemic collapse, with severe consequences for homes, businesses, and the broader economy.
