N4 Trn Debt: Total Blackout Looms As GenCos Issue Ultimatum
As Nigerian electricity consumers lament over deterioration in power supply, their ordeal may likely take further plunge as Power Generation Companies (GenCos) in the country threaten shut down over a N4 trillion debt owed them by government.
Nigeria has 23 power generation companies and all of them said the business environment is no longer tolerable.
They said in a statement that to guarantee steady electricity supply, the over N4 trillion debt, comprising N2 trillion for power supplied in 2024 and N1.9 trillion in legacy debts, must be settled by the Nigerian government.
The firms, under the aegis of the Association of Power Generation Companies, in a statement issued on Monday signed by the Chairman of the Board of Trustees, Col. Sani Bello (rtd), said they are being paid less than 30 per cent of monthly invoices for power supplied to the national grid.
They warned that the situation is pushing the Nigerian power sector towards total collapse.
The companies observed that in spite of several engagements with the Federal government, there has been no clear financing plan to offset the debt.
“No possible solutions, including cash payments, financial instruments, and debt swaps, are in sight.
“The 2025 government budget allocates only N900 billion, raising concerns about its adequacy to cover arrears and future payments.
The power generated by GenCos has continued to be consumed in full without corresponding full payment, notwithstanding the commencement of the Partial Activation of Contracts in the NESI, which took effect from July 1, 2022; the minimum remittance order; bilateral market declaration; waterfall arrangement; the risks of inflation; forex volatility with no dedicated window to cushion the effect of the forex impact; or the supplementary MYTO order, which leaves about 90 per cent of GenCos monthly invoices unmet without a bankable securitisation or financing plan. This situation has dire consequences for the GenCos and, by extension, the entire power value chain”.
They, therefore, demanded that “immediate and expedited action be taken to prevent national security challenges that may result from the failure of the GenCos to sustain steady generation of electricity for Nigerians.”
In its response, the Federal Government acknowledged the issues raised by the GenCos and said efforts are on to settle them.
The Special Adviser, Strategic Communications and Media Relations to the Minister of Power, Bolaji Tunji, said the government is aware of this debt arising from the FG’s commitment on subsidy.
“The issue is being discussed with the Ministry of Finance, making a case for how the debt must be paid. We expect the Ministry of Finance to take action on this soon,” he said.
