Nigeria’s electricity sector is facing deepening financial strain as the Federal Government’s outstanding obligations to power generation companies (GENCOs) are projected to rise to about ₦6.4 trillion by the end of 2025, up from roughly ₦6 trillion reported in October. This represents an increase of about 6.25 percent, driven largely by persistent monthly revenue shortfalls.
Findings indicate that the accumulated liabilities—covering both legacy debts and more recent obligations—span a ten-year period between 2015 and 2025. Industry operators estimate that the sector is currently recording a funding gap of around ₦200 billion every month, a trend that continues to widen the government’s indebtedness.
The Chairman of the Association of Power Generation Companies (APGC), Col. Sani Bello (retd.), has repeatedly warned that the growing debt burden is severely limiting the ability of GENCOs to operate efficiently. Despite the challenges, he noted that generation companies have continued to shoulder the responsibility of keeping the national grid functional, often at significant financial sacrifice.
Industry sources told Vanguard that if the present conditions persist, total outstanding obligations could reach ₦4 trillion by the end of 2024, with an additional ₦2.4 trillion accruing in 2025 due to ongoing monthly deficits. Operators expressed concern that government assurances to settle the debts have yet to translate into concrete action.
One power sector operator, who spoke anonymously, described the promises of debt repayment as unrealistic, saying GENCOs are barely managing operations and unable to function at full capacity due to cash flow constraints.
Experts have also raised alarms over the sustainability of the current situation. Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), said government intervention has become inevitable in the short term to avert a breakdown of the electricity supply system. However, he warned that the rising debt profile is fiscally unsustainable without meaningful structural reforms.
According to Yusuf, financial stress in one segment of the power value chain quickly spreads to others. GENCOs struggle to pay gas suppliers, distribution companies (DISCOs) lack sufficient revenue to meet their obligations, and the transmission network continues to suffer from underinvestment and governance issues. These challenges, he said, have entrenched a sector-wide liquidity crisis, weakening investor confidence and threatening the long-term stability of Nigeria’s power industry.
