The crisis in Nigeria's electricity generation has deepened as legacy debts owed to power generation companies (GenCos) have surged to approximately N7 trillion. The Federal Government had earlier approved a N3.3 trillion financial settlement plan to clear legacy debts accumulated within the Nigerian Electricity Supply Industry (NESI) between 2015 and early 2025.
Under the arrangement, outstanding obligations to GenCos were to be settled through a combination of 10-year promissory notes and proceeds from a N501.02 billion bond issued through the Nigerian Bulk Electricity Trading (NBET) Plc. However, disagreements over the reconciliation of claims between the government and GenCos have slowed the implementation of the settlement framework.
APGC Raises Alarm
Executive Secretary and CEO of the Association of Power Generation Companies (APGC), Dr Joy Ogaji, warned that the mounting liabilities threaten the sustainability of electricity generation and the stability of the power sector. She stated that after the government's verified claims of N3.3 trillion, the debt later rose to N3.8 trillion before the appointment of the Special Adviser on Power, Mr Rilwan Lanre Babalola, and has now ballooned to about N7 trillion as unpaid invoices continue to accumulate.
Dr Ogaji declared that power generation companies have yet to receive any fresh payment despite repeated assurances by the Federal Government. She also disclosed that the Federal Government has not completed the disbursement of the N500 billion raised through the bond market in December to offset part of the outstanding obligations owed to GenCos.
No Agreement on Debt Forgiveness
She stressed that generation companies never agreed to forfeit half of the debt owed to them. “To date, we have not received any payment. We have not accepted the N3.3 trillion settlement proposal,” she said. Dr Ogaji added that attempts to persuade gas suppliers to accept a 50 per cent reduction in the debts failed. “When we told the gas suppliers that the Federal Government had agreed to take 50 per cent off the debts, the gas suppliers refused and told us that we are on our own,” she stated.
Call for Emergency Reforms
Dr Ogaji urged the newly appointed Minister of Power, Mr Joseph Tegbe, to demonstrate strong political will and declare a state of emergency in the power sector. She also called for urgent reforms to halt the continuous accumulation of debts owed to generation companies. According to her, the government must establish a sustainable payment framework that prevents fresh debts from piling up. “His priority should be to stop the continuous growth of the debt profile while addressing the existing obligations,” she said.
