Power generation companies (GenCos) on Monday warned that power plants across the country were facing imminent shutdowns due to a massive N4 trillion debt owed by the Federal Government.

Nigeria has 40 power-generating plants connected to the national grid, which are managed by generation companies (GenCos), independent power providers, and the Niger Delta Holding Company.

In a statement issued by the GenCos through the Board of Trustee chairman, Colonel Sani Bello (retd), under the auspices of the Association of Power Generation Companies (APGC), it was revealed that N2 trillion is owed for power supplied in 2024, as well as N1.9 trillion in legacy debts.

The statement further indicated that the GenCos were receiving less than 30 per cent of monthly invoices for power supplied to the national grid.

“It is no longer news that the power generation companies have continued to bear the brunt of the liquidity crisis in the Nigerian Electric Supply Industry (NESI). GenCos, on their part as responsible investors with patriotic zeal, have made large-scale investments and have continued to demonstrate absolute commitment by ramping up capacities in line with their contracts over the past ten years, despite system constraints, policies and regulations that are not investor-friendly, increasing debts owed by the Federal Government without a clear financing plan, lack of firm contracts, and a market without securitisation but based on best endeavours, thereby hampering future planning.

“Notwithstanding this and other severe difficulties that the GenCos have endured since the takeover in 2013, they have kept to the terms of their contractual agreements by ramping up capacity, which has been largely constrained systemically.

“Against the backdrop of the many challenges facing the power sector in Nigeria, the crises arising from cash liquidity are at the forefront and have reduced the GenCos’ ability to continue to perform their obligations, thereby threatening to completely undermine the electricity value chain.

“The GenCos’ expectations of being settled through external support such as the World Bank PSRO have also been dampened due to other market participants’ inability to meet their respective distribution-linked indicators (DLIs), enshrined in the Power Sector Recovery Programme (PSRP).”

“In 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 electricity generation for Nigerians.

“The 2024 collection rate has dropped below 30 per cent, and 2025 is no better, severely affecting the GenCos’ ability to meet financial obligations. Tax and regulatory challenges, including high corporate income tax, concession fees, royalty charges, and new FRC compliance obligations, are further straining the GenCos’ revenue. GenCos are currently owed about N4 trillion (N2 trillion for 2024 and N1.9 trillion in legacy debts). No possible solutions, including cash payments, financial instruments, or debt swaps, are in sight.

“The 2025 government budget allocates only N900 billion, raising concerns about its adequacy to cover arrears and future payments. The power generated by the GenCos continues to be consumed in full without corresponding full payment. This is despite the commencement of the Partial Activation of Contracts in NESI, which took effect from 1 July 2022, the minimum remittance order, bilateral market declaration, waterfall arrangement, inflation risks, foreign exchange volatility with no dedicated window to cushion the effects of forex impacts, and the supplementary MYTO order. This leaves about 90 per cent of the GenCos’ monthly invoices unmet without a bankable securitisation or financing plan. This situation has dire consequences for the GenCos and, by extension, the entire power value chain,” the statement read.

The statement, however, called for the implementation of payment plans to settle all outstanding invoices owed to the GenCos, while noting that the lack of capital within the power industry has become one of the fundamental issues preventing Nigerians from enjoying sustainable improvements in electricity supply. (Nigerian Tribune)