Electricity Generation Companies (GenCos) have raised fresh concerns over the worsening liquidity crisis in Nigeria’s power sector, disclosing that total indebtedness has surged to ₦6.5 trillion as of last month and could escalate to ₦8.8 trillion before the end of the year.
In a memo addressed to the Ministry of Power, the GenCos called for urgent structural reforms, warning that the sector’s financial sustainability is under severe threat.
According to the memo, the debt accumulated in 2025 alone stands at ₦2.4 trillion, driven by a monthly revenue shortfall of about ₦200 billion. The companies explained that out of the ₦280 billion monthly invoices issued across the sector, only 35 per cent is paid, leaving a substantial funding gap that continues to widen.
The operators further highlighted operational constraints affecting the industry. Although installed generation capacity has increased to 15,500 megawatts, only about 5,000 megawatts are successfully transmitted to consumers due to transmission and distribution limitations.
The GenCos urged the Federal Government to initiate a presidential-led reform process, establish a long-term debt resolution framework, strengthen the entire electricity value chain, and restore investor confidence.
They stressed that generation companies operate continuously under challenging conditions, maintaining round-the-clock operations despite liquidity constraints, fuel supply limitations, and infrastructure bottlenecks.
“While power interruptions are visible to the public, the operational effort required to sustain generation under difficult conditions remains largely unseen,” the memo stated, describing GenCos as the “silent force” sustaining electricity supply in the country.
Governance, Integration Key to Sustainability
Reacting to the development, energy economist and Executive Director of the Emmanuel Egbigah Foundation, Prof. Wumi Iledare, emphasized the need for governance discipline as state governments increasingly participate in electricity generation and distribution.
He advocated adherence to the “quadruple E” principles — Efficiency, Effectiveness, Ethics, and Equity — warning that decentralisation without proper governance could replicate existing federal inefficiencies.
Iledare noted that the Nigerian Bulk Electricity Trading Plc (NBET) remains critical to market stability as a creditworthy intermediary, ensuring payment assurance and sustaining investor confidence. However, he cautioned that NBET’s continued relevance depends on transparency, ethical leadership, and robust oversight.
He also argued that sustaining GenCos cannot be achieved in isolation, stressing the need for optimisation across the midstream and downstream segments of the energy value chain.
“Power generation without reliable gas supply, efficient transmission, and effective distribution is economically unsustainable,” he said, adding that strategic or partial vertical integration should be considered to enhance operational synergy, cost efficiency, and investment security.
According to him, long-term sustainability will depend on integrated governance that aligns gas supply, power generation, transmission, and distribution under coherent economic and ethical principles.
Federal Government’s Debt Intervention
The development comes weeks after the Federal Government issued a ₦501 billion inaugural power sector bond under the Presidential Power Sector Debt Reduction Programme.
The bond, which achieved 100 per cent subscription, attracted participation from pension funds, banks, asset managers, and other institutional investors.
Issued through NBET Finance Company Plc, the Series One bond raised ₦501 billion, with ₦300 billion sourced from capital market investors and ₦201 billion allotted directly to participating generation companies.
The programme targets long-standing payment arrears owed to GenCos, which have constrained liquidity across the electricity value chain for over a decade, weakened balance sheets, and dampened investment appetite.
Despite the intervention, stakeholders warn that without comprehensive structural reforms, the sector’s debt burden may continue to rise, threatening the stability of Nigeria’s electricity industry.
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