Nigeria’s 23 electricity generation companies have issued a stark warning that they may be forced to shut down operations as a result of the deepening financial crisis plaguing the power sector.
According to them, the unpaid debts, which now exceed ₦4 trillion, have made it increasingly difficult to guarantee consistent electricity supply across the country.
Operating under the umbrella of the Association of Power Generation Companies (APGC), the GenCos sounded the alarm in a statement released on Monday. The message was endorsed by the Chairman of the Board of Trustees, Col. Sani Bello (retd.).
The GenCos stressed that unless the government urgently intervenes, the growing debt and critical operational challenges could culminate in a complete shutdown of power generation facilities nationwide.
They described the non-payment for electricity supplied and consumed on the national grid as a dangerous trend pushing Nigeria’s already fragile power sector towards total collapse.
In their statement titled ‘Over ₦4 trillion unpaid invoices threaten GenCos imminent shutdown’, the group decried the Federal Government’s failure to articulate a clear financial strategy for the sector.
They also highlighted intensifying fiscal and operational issues within the Nigerian Electricity Supply Industry (NESI).
The GenCos further criticised the Nigerian Bulk Electricity Trading Plc (NBET) and other stakeholders for allegedly sidelining them in the implementation of the NESI’s “waterfall arrangement.” Under this system, other service providers reportedly receive full payment, while GenCos receive a meagre 9% to 11% of what is owed.
The statement read, “The Power Generation Companies (“GenCos”) are constrained to issue this press release to draw the attention of the Federal Government and key stakeholders to the need to urgently address the issue of inadequate payment for electricity generated by them and consumed on the national grid, which is currently threatening the continued operation of their power generation plants.
“Against the backdrop of the many challenges facing the power sector in Nigeria, the crises from cash liquidity are on the top burner and have reduced GenCos’ ability to continue to perform their obligations, thereby threatening to completely undermine the Electricity value chain.
“In the light of the severity of the issues highlighted above, the GenCos are requesting 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.”
It is worth noting that back in February, Minister of Power Adebayo Adelabu revealed that the government’s total debt to both generation and distribution companies had climbed beyond ₦4 trillion.
The Minister broke it down as ₦2 trillion owed to GenCos as legacy debts, ₦1.9 trillion as part of the 2024 electricity subsidy backlog, and ₦450 billion owed to DisCos for the same subsidy.
