Precious Anga
Lagos — Nigeria’s electricity generation companies have warned that worsening gas supply disruptions, driven by mounting unpaid debts, are pushing several power plants towards operational collapse, raising fresh concerns over the stability of electricity supply across the country.
The Association of Power Generation Companies, APGC, said the persistent liquidity crisis in the Nigerian Electricity Supply Industry, NESI, has left many generation companies unable to meet their financial obligations to gas suppliers, forcing some plants to scale down operations while others have shut down completely.
Speaking in an interview, the Chief Executive Officer of APGC, Joy Ogaji, said the Federal Government’s plan to raise an additional ₦729 billion through the second tranche of the Presidential Power Sector Debt Reduction Programme would provide only temporary relief, insisting that it would not address the structural challenges responsible for the sector’s financial distress.
According to her, the debt owed to electricity generation companies has climbed beyond ₦3 trillion as fresh liabilities continue to accumulate every month, making it increasingly difficult for operators to sustain electricity generation.
Ogaji disclosed that several generation companies have already been disconnected from gas supplies after failing to settle outstanding obligations, warning that the development poses a significant threat to Nigeria’s already fragile power system.
“You can see that most of the power plants are shutting down. Ibom Power, for example, has not generated since 2025 because of the debt. Gas suppliers have cut them off. Several other GenCos have been cut off by gas suppliers. The story of Ibom Power is the story of most of the GenCos. Some of them have not paid salaries for months,” she said.
She stressed that unless the underlying liquidity crisis is resolved, more generating plants could be forced to suspend operations, worsening electricity shortages nationwide.
“The way forward is for GenCos to stop generating so that there will be no more shortfalls,” Ogaji warned.
The APGC boss maintained that generation companies are not opposed to the Federal Government’s decision to settle outstanding obligations through bond issuances but argued that the approach must be backed by broader reforms capable of preventing new debts from piling up.
She questioned claims that the latest bond programme would permanently resolve the sector’s financial crisis, noting that the current intervention only covers verified legacy debts accumulated up to December 2024, while fresh obligations continue to grow because electricity distribution companies, DisCos, and the Nigerian Bulk Electricity Trading Plc, NBET, are still unable to settle invoices in full.
“Will the bond really clear the debts? Please let’s send the right message. How will the second tranche clear a seven-year bond of ₦4 trillion? What happens to the accumulation from 2025 to 2026? Please, no one should use GenCos to play politics,” she said.
Ogaji explained that although the government intends to spread the ₦4 trillion debt repayment over seven years, the sector continues to record monthly revenue shortfalls, meaning new debts will continue to accumulate during the repayment period.
“Every month, the DisCos are not paying 100 per cent. NBET is not paying 100 per cent. You’re raising a ₦4 trillion bond over seven years. This ₦4 trillion will be spread over seven years. And currently, there is still a shortfall. Not that the shortfall has stopped. So by the time you finish paying the ₦4 trillion over seven years, more than another ₦7 trillion would have accumulated. How do we deal with that? So what we are looking for is a sustainable solution,” she added.
She also faulted the current electricity subsidy regime, arguing that while government continues to announce subsidy support for electricity consumers, the financial commitment is not adequately backed by budgetary provisions.
“One of the sustainable ways is for the Federal Government to acknowledge the fact that they cannot subsidise the power market. Because you can see it’s only on paper that the government is subsidising power. It’s not in the budget,” she stated.
Ogaji urged the Federal Government to adopt a more sustainable financing model for the electricity market by ensuring realistic subsidy provisions, improving market discipline and restoring liquidity across the entire electricity value chain.
Despite the concerns raised by operators, the Federal Government insists that significant progress has been made in addressing the inherited debts within the power sector.
Speaking at the NBET Finance Company Plc Series II Bond Issue Investors’ Forum in Abuja, the Special Adviser to the President on Energy, Olu Verheijen, said the government had fulfilled all obligations under the first phase of the debt settlement programme.
She disclosed that approximately ₦501 billion had been deployed under the first tranche, with about ₦333 billion already paid to eight participating generation companies covering 17 power plants.
According to Verheijen, the successful execution of the first bond issuance has restored investor confidence in Nigeria’s electricity market and created the foundation for the planned ₦729 billion Series II bond aimed at improving liquidity across the power value chain.
However, industry operators maintain that unless the government addresses the structural weaknesses responsible for persistent payment defaults, debt accumulation and gas supply disruptions, the country may continue to face declining electricity generation despite ongoing financial interventions.
