Written By: Faith Jemosop
President Bola Tinubu is set to engage with Nigeria’s power generation companies (GenCos) in a high stakes meeting aimed at resolving the crippling ₦4 trillion debt burden threatening the stability of the nation’s electricity sector.
The summit, expected to take place in Abuja, comes amid escalating concerns over liquidity shortfalls, frequent grid collapses, and deteriorating infrastructure that have left millions of Nigerians in the dark and investors wary of the sector’s viability.
The meeting follows mounting pressure from GenCos, who warn that the growing debt comprising over ₦2 trillion in unpaid invoices and nearly ₦2 trillion in outstanding subsidies has hampered their ability to maintain operations, pay for gas, and invest in critical infrastructure. Power Minister Adebayo Adelabu confirmed that the government intends to settle at least half of the debt this year through a combination of budgetary allocations and promissory notes.
“How do you expect the GenCos to perform optimally? How do you expect them to pay for gas, service, and maintain their turbines and other infrastructure as well as pay their staff? If a total of ₦4 trillion is being owed to them,” Mr. Adelabu said.
The financial strain has already led to a significant drop in power generation. Despite an installed capacity of 13,000 megawatts, actual generation often falls below 5,000 megawatts, with the sector recording 12 grid collapses in 2024 alone. These failures have
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Payment performance within the sector remains dismal. For instance, in August 2024, GenCos issued invoices totaling ₦1.891 trillion, yet received only ₦396.53 billion in payments, a mere 20.96% of the billed amount. This shortfall has been attributed to the inability of distribution companies (DisCos) to collect sufficient revenue, compounded by issues such as estimated billing, vandalism, and inadequate metering.
In response to these challenges, the government has taken steps to reduce electricity subsidies by 35%, following a targeted tariff hike for high-usage consumers. This move generated an additional ₦700 billion in revenue, helping to alleviate some fiscal pressure. However, the sector still faces deep-rooted issues, including outdated infrastructure and a lack of investment.
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The upcoming meeting between President Tinubu and the GenCos is seen as a critical step toward addressing these systemic problems and charting a sustainable path forward for Nigeria’s electricity industry.
As the nation grapples with these challenges, stakeholders emphasize the urgency of implementing reforms that ensure transparency, improve revenue collection, and attract investment. Only through concerted efforts can Nigeria hope to achieve a stable and reliable power supply that meets the needs of its growing population and economy.
