A significant crisis is unfolding in Nigeria as power generation companies prepare for a confrontation due to escalating unpaid debts from the federal government and other market participants, which have now exceeded N4 trillion.
Retired Colonel Sani Bello, Chairman of the Board of Trustees of the Generation Companies (GenCos), conveyed these concerns to reporters in Abuja on Monday. The GenCos expressed that the increasing financial liabilities are severely hindering their operational capabilities and pose a risk of a complete halt to electricity generation across the nation.
“The electricity produced by GenCos continues to be fully utilized without any corresponding payments being made,” he stated. “This predicament has severe implications for the GenCos and, consequently, for the entire power value chain.”
Of the total N4 trillion owed, N2 trillion pertains to electricity generated in 2024, while N1.9 trillion consists of legacy debts. The GenCos pointed out that the N900 billion allocated to the power sector in the 2025 national budget is grossly insufficient to settle these debts and ensure future payments.
Bello characterized the current situation as “a clear deviation from the established terms of the Power Purchase Agreement,” noting that under present circumstances, GenCos receive only about 9–11 percent of their billed amounts, while regulatory bodies and other service providers are compensated in full.
Additionally, the GenCos reported a significant drop in collection rates, which fell below 30 percent in 2024, exacerbating the liquidity crisis. “The cash liquidity issues are critical and have diminished the GenCos’ capacity to fulfill their obligations,” he remarked.
The situation is further complicated by operational costs that are tied to U.S. dollars and the limited availability of foreign exchange. “The necessity for a specialized window or a stable dollar allocation option for the GenCos cannot be overstated,” Bello emphasized.
The GenCos are calling for immediate government intervention, which includes the full payment of outstanding invoices, a re-evaluation of the waterfall payment structure, and guarantees supported by institutions such as the World Bank and the African Development Bank (AfDB).